On 1st April,2012, Sonu Ltd. purchased a machinery for ₹3,90,000 on which they spent ₹5,000 for carriage, ₹2,000 for brokerage of the middleman, ₹2,500 for installation and ₹500 for an iron pad. In this question we will include all these expenses in cost of machinery or will take these as separate amount?
Dear Student,
The additional expenses like carriage, brokerage for middleman, installation expenses and iron pad installation will be included in the price of machinery because of the cost concept of accounts which states that the asset must be recorded at the purchase price which is inclusive of expenses like cartage, acquisition costs, brokerage etc.
The value of machinery will be 390,000+2,500+500+5,000+2,000= 400,0000
Hope this information has solved your queries.
Regards
The additional expenses like carriage, brokerage for middleman, installation expenses and iron pad installation will be included in the price of machinery because of the cost concept of accounts which states that the asset must be recorded at the purchase price which is inclusive of expenses like cartage, acquisition costs, brokerage etc.
The value of machinery will be 390,000+2,500+500+5,000+2,000= 400,0000
Hope this information has solved your queries.
Regards