Anak Mami Berhad owns a factory which sits on freehold land. The factory produces metal works for hawker stalls since Merdeka. The factory was revalued ten years ago and is being depreciated over 50 years from that value. The company made one nasi kandar stall lines many years ago and today the meta used is toxic. Anak Mami expects a nasi kandar stall owner in Sungai Petani will take logal action - gainst them No montion was

Anak Mami Berhad owns a factory which sits on freehold land. The factory produces metal works for hawker stalls since Merdeka. The factory was revalued ten years ago and is being depreciated over 50 years from that value. The company made one nasi kandar stall lines many years ago and today the meta used is toxic. Anak Mami expects a nasi kandar stall owner in Sungai Petani will take logal action - gainst them No montion was

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 17P

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In janaruary, Prahbu purchased a new machine for use in the existing production line of his manufacturing business for $90,000. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $2,500 to install the machine, and after the machine is installed, he pays $1,300 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete and prahbu places the machine in service on the production line. On December 3, prahbu pays another $3,300 to perform periodic qaulity testing after the machine is placed in service. . How much will prahbu be required to capitalize as the cost of the machine.?
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In January, Prahbu purchased for $100,000 a new machine for use in an existing production line of his manufacturing business. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $4,075 to install the machine, and after the machine is installed, he pays $2,350 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $5,400 to perform periodic quality control testing after the machine is placed in service. How much will Prahbu be required to capitalize as the cost of the machine?
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