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Gareth, a sales tax registered trader purchased a computer for use in his business. The invoice for the computer showed following costs related to purchase:
Computer 890
Additional memory 95
Delivery 10
Installation 20
Maintenace 1 year 25
Sles tax 182How much should Gareth capitalise as a non current asset in relation to the purchase?
(A) $1,222
(B) $1,040
(C) $890
(D) $1,015If the company is the final consumer of the computer, should it not support the tax?
Many thanks for your help
Computer 890
Additional memory 95
Delivery 10
Installation 20Total to be capitalised = 1,015
If the purchaser is registered for sales tax, the sales tax is not capitalised.
If the purchaser is not registered for sales tax, the sales tax would be capitalised – but that is not the case in this question.
The tax is borne by the consumer who is not registered for sales tax.
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