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Question 6 Holly Jolly Corporation (HJC) purchased new equipment at a...

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Question 6 Holly Jolly Corporation (HJC) purchased new equipment at a cost of $230,000 plus 7% PST and 5% GST (GST is a recoverable tax). HJC paid $1,400 in transportation fees to have the new equipment delivered to its plant. Because the location where the new equipment was going to be installed was not ready HJC incurred $700 in storage costs for two months. $650 of borrowing costs were also incurred because of this two-month delay. When the equipment was installed HJC incurred $500 in labour to get the equipment's computer system up and running and ensure that everything was functioning effectively. During the first quarter of the year after the new equipment was installed it was only utilized at 60% capacity. Labour costs of $4,500 and material costs of $3,000 were incurred in production, while the units sold generated $8,200 in sales. Required (11 marks): Determine what amount should capitalized for the new equipment. Explain why each amount is included or excluded from your calculation

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