PRC-1 · Chapter 6 · Question 15 of 100
A machine has a list price of Rs. 82,000. The supplier offers a 10% trade discount and a 5% settlement (cash) discount, both of which are taken. The business also incurs import duty of Rs. 1,500, delivery fees of Rs. 2,050, electrical installation costs of Rs. 9,500, and pre-production testing costs of Rs. 4,900. What is the capitalized cost of the machine?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 88,060
Explanation
List price 82,000 - 10% trade discount (8,200) = 73,800. Less 5% cash discount (3,690) = 70,110. Add import duty (1,500) + delivery (2,050) + installation (9,500) + testing (4,900) = Rs. 88,060.
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