Reference no: EM132679380

An entity acquired a new processing machine on June 30, 2020. Details of the acquisition were:

Invoice cost     3,200,000

Cost of transportation to the entity's factory 100,000

Cost of installation:

Labor paid 70,000

Materials used 30,000

Payment for strengthening the floor to support the weight of the new machine 160,000

• The terms of the acquisition include a 3% discount if payment is made in 10 days. The entity paid on July 21, 2020. The entity's chief engineer spent two-thirds of his time during trial run of the new machine. The monthly salary is P120,000.
• On August 1, 2020, the entity requested an allowance from the supplier because the machine proved to be of less than standard performance capability. The supplier granted cash allowance of P200,000. The cost of removing the old machine before the new machine was acquired amounted to P20,000. The operator of the old machine who was laid off due to the acquisition of the new machine was paid a gratuity of P60,000.

Problem 1: What is the correct cost of the new machine?

Group of answer choices

Option 1: 3,280,000

Option 2: 3,244,000

Option 3: 3,184,000

Option 4: 3,104,000