determine which one of the following amounts represents the total capitalised cost of the asset, equipment
1.1.2 Busi Ngidi is the sole proprietor of Ngidi’s Clothing Manufacturers which was
renting property in an industrial park. To expand her operations, Ngidi’s
purchased its own property, demolish the old building, construct a new building
and install new equipment. The following costs were made available Ignore VAT
implications: (2)
Equipment R
Purchase price of equipment- 400 000
Cost of transport and installation of equipment- 70 000
Fine paid for illegal transport of equipment - 10 000
Property R
Purchase price of property- 840 000
Legal and transfer fees- 21 000
Cost of demolishing old building- 30 000
Proceeds from sale of old building material- 9000
Architect’s and engineers’ fees - 16 000
Cost of construction of new building- 502 000
Determine which one of the following amounts represents the total capitalised
cost of the asset, property.
A) R1 400 000
B) R1 363 000
C) R1 418 000
D) R1 379 000
The answer is D) R1 379 000
1.1.3 Using the information for Ngidi’s Clothing Manufacturers supplied in 1.1.2 above,
determine which one of the following amounts represents the total capitalised
cost of the asset, equipment. (2)
A) R400 000
B) R470 000
C) R480 000
D) R460 000
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