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The components of the cost of a major item of equipment are given below. GHS Purchase price 780,000 Import duties 117,000 VAT (refundable) 78,000 Site preparation 30,000 Installation costs 28,000 Pre-production costs 18,000 Initial operating losses before the asset reaches planned performance 50,000 Estimated cost of dismantling and removal of the asset, recognized as a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets 100,000 1,201,000 In accordance with IAS 16 Property, Plant and Equipment, what amount should be recognized as the cost of the asset?

The components of the cost of a major item of equipment are given below. GHS Purchase price 780,000 Import duties 117,000 VAT (refundable) 78,000 Site preparation 30,000 Installation costs 28,000 Pre-production costs 18,000 Initial operating losses before the asset reaches planned performance 50,000 Estimated cost of dismantling and removal of the asset, recognized as a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets 100,000 1,201,000 In accordance with IAS 16 Property, Plant and Equipment, what amount should be recognized as the cost of the asset?

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter7: Fixed Assets, Natural Resources, And Intangible Assets
Section: Chapter Questions
Problem 7.3.4MBA
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The components of the cost of a major item of equipment are given below.
GHS
Purchase price 780,000
Import duties 117,000
VAT (refundable) 78,000
Site preparation 30,000
Installation costs 28,000
Pre-production costs 18,000
Initial operating losses before the asset reaches planned
performance 50,000
Estimated cost of dismantling and removal of the asset,
recognized as a provision under IAS 37 Provisions,
Contingent Liabilities and Contingent Assets 100,000
1,201,000

In accordance with IAS 16 Property, Plant and Equipment, what amount should be recognized as the cost of the asset?

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