The components of the cost of a major item of equipment are given below.    GHS Purchaseprice                                                                                  780,000                                                              Import duties                                                                                  117,000 VAT (refundable)                                                                            78,000                                                                        Site preparation                                                                             30,000        Installation costs                                                                             28,000    Pre-production                                                                                18,000                                                        Initial operating losses before the asset reaches planned performance                                                                                         50,000 Estimated cost of dismantling and removal of the asset,    recognized as a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets                                       100,000                                                                                                           1,201,000 In accordance with IAS 16 Property, Plant and Equipment, what amount should be recognized as the cost of the asset?

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  • The components of the cost of a major item of equipment are given below.

   GHS

Purchaseprice                                                                                  780,000                                                             
Import duties                                                                                  117,000
VAT (refundable)                                                                            78,000                                                                       
Site preparation                                                                             30,000       
Installation costs                                                                             28,000    Pre-production                                                                                18,000                                                       
Initial operating losses before the asset reaches planned performance                                                                                         50,000
Estimated cost of dismantling and removal of the asset,   
recognized as a provision under IAS 37 Provisions,
Contingent Liabilities and Contingent Assets                                       100,000
                                                                                                          1,201,000

In accordance with IAS 16 Property, Plant and Equipment, what amount should be recognized as the cost of the asset?

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