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Hello Mr Mike,
Could you please advise me on this question:
There are the costs of the machine which has been bought on 1 october 2015 and that part is clear to me. Then on 1 oct 2017 the company decided to upgrade the machine by adding new components at a cost of 200000. This upgrade led to a reduction in the production time per unit of the goods being manufactured using the machine.
What amount should be recognised under non current assets as the cost of the machine?
In the answer doesn’t include the cost of 200000 which i think it should be included as it is a subsequent expenditure that contributes to the improvement of the asset’s performance.Thank you in advance
Yes, it sounds to me that it should be capitalise
Do you have the name of the question (or the exam reference) so that I can check the precise wording … and the dates and amounts!
“Do you have the name of the question (or the exam reference)” was my question
“revision kit bpp ,question number 32 , section b case” doesn’t answer either of my requests!
In the copy / version of the revision kit that I have, Dearing is question 9 and it’s not a mcq
However, in the answer to Dearing in the revision kit that I have, the $200,000 upgrade IS included in the final figure of $670,000
No offence intended, but are you sure that you’re reading the answer correctly?
Whatever, (it could be that BPP have made an error when adapting the Dearing 15 mark question in my revision kit from the December 2008 exam) the $200,000 upgrade that crucially improved the efficiency of the original machine should be capitalised
OK?
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