Determine the costs to be capitalized as property and plant

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Reference no: EM131965671

Problem

Property, Plant and Equipment Problem #1

In 2009, Excetera, Inc. installed a new computerized production line at its North Dakota manufacturing facility. It incurred the following costs:

Cost of site preparation$700,000

Consulting fee (for advice on acquisition of the production line)25,000

Cost of the production line (per supplier's invoice)2,400,000

Sales tax (collected by the supplier)100,000

Initial delivery and handling costs600,000

Estimated dismantling costs to be incurred after seven years300,000

Computer training for employees prior to start of production150,000

Cost of testing whether the line is functioning properly20,000

Operating losses before commercial production begins400,000

Required: Determine the costs to be capitalized as property, plant and equipment under IFRS.

Reference no: EM131965671

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