Knight Company purchased an equipment for P369,600 to be used in the construction of MRT-3....
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Accounting
Knight Company purchased an equipment for P369,600 to be used in the construction of MRT-3. The company had to pay the following in relation to the equipment:
Import duties P10,000 Non-refundable taxes 15,000 Shipping costs 2,000 Cost of testing 1,200 Installation costs 1,800
Other information:
- The company is required to dismantle the equipment at the end of its useful life. The company estimates the dismantling costs to be P50,000. The relevant discount rate is 10%.
- The equipment has a useful life of 5 years.
- How much is the initial cost of the equipment?
- The purchase price includes input vat of P39,600
How much is the initial cost of the asset?
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