CIMA BA3 · Chapter 10 · Question 10 of 10
A company buys a machine for $45,000. It also pays delivery costs of $1,200, installation costs of $2,300, staff training costs of $900 and a first-year maintenance contract of $1,500. Under IAS 16 Property, Plant and Equipment, what is the cost of the machine?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $48,500
Explanation
Cost includes the purchase price and costs directly attributable to bringing the asset to working condition: $45,000 + delivery $1,200 + installation $2,300 = $48,500. Staff training and maintenance are revenue expenses.
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