Page 369 - F3 -FA Integrated Workbook STUDENT 2018-19

Answers

Chapter 7

Example 1

Cost of a tangible non-current asset

Barney purchased a new item of plant which had a list price of $100,000, but
which was subject to a 10% trade discount. Additionally, Barney paid $2,500
delivery costs and a further $1,500 for installation. Barney also paid $9,000
for a three-year maintenance agreement. Barney paid the total amount due
immediately.

Required:

What amount should be capitalised by Barney as the cost of the item of
plant?

Solution

$

Cost of plant $100,000 × 90% 90,000
Delivery costs 2,500

Installation costs 1,500
–––––
94,000

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