ACCA Applied Knowledge · Financial Accounting · The main elements of financial statements
Zeta Co buys a machine for $80,000 plus non-refundable import duty of $6,000, delivery of $2,000, installation of $4,000 and staff training of $3,000. What amount should be recognised as the cost of the machine in the statement of financial position?
The machine is recorded at $92,000, being the price plus import duty, delivery and installation. Staff training of $3,000 is not a cost of getting the asset ready for use, so it is charged to profit or loss as an expense.
- A$92,000Correct
- B$95,000
- C$86,000
- D$80,000
Explanation
Cost includes purchase price, import duty, delivery and installation: 80,000 + 6,000 + 2,000 + 4,000 = $92,000. Training costs are not directly attributable to bringing the asset to working condition and are expensed. Including training gives $95,000, which is wrong.
Did you get it right without looking?
One question tells you little. A timed set on The main elements of financial statements shows your real accuracy, how long you take and where you lose marks.
More The main elements of financial statements questions
- Which of the following items would be recognised as income in the statement of profit or loss rather than as a gain on revaluation in other …
- Which of the following is a correct reason for classifying a liability as current in the statement of financial position?
- Which of the following is a liability of Kestrel Co at the reporting date?
- Which of the following items would NOT meet the Conceptual Framework definition of a liability at the reporting date?
- Which of the following items would be presented within equity in a company's statement of financial position?
- Dalton Co had opening equity of $200,000 and closing equity of $245,000. During the year the owners introduced $30,000 of new capital and Da…