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An entity started construction on a building for its own use on 1 April 20X7 and incurred the following costs:
$000
Purchase price of land 250,000
Stamp duty 5,000
Legal fees 10,000
Site preparation and clearance 18,000
Materials 100,000
Labour (period 1 April 2007 to 1 July 2008) 150,000
Architect’s fees 20,000
General overheads 30,000
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583,000
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The following information is also relevant:
Material costs were greater than anticipated. On investigation, it was found that materials costing $10 million had been spoiled and therefore wasted and a further $15 million was incurred on materials as a result of faulty design work.
As a result of these problems, work on the building ceased for a fortnight during October 2007 and it is estimated that approximately $9 million of the labour costs relate to this period.
The building was completed on 1 July 20X8 and occupied on 1 September 20X8.
Required:
Calculate the cost of the building that will be included in tangible non-current asset additions.
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