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Saturday, 30 March 2019

Practice question 3: Acquisition of water filtration plant.

Difficulty level: Normal.









ABC (Limited) acquired a water filtration plant from XYZ (Limited) having a list price of Rs.585,000 on 1st Jan 20XX. Following are the details related to this acquisition.
  1. Sales tax(Refundable) 17% already included in the list price.
  2. Trade discount allowed @ 2%.
  3. Further 2% two percent cash discount were also allowed if the payment had been made by 31st January.
  4. Transportation and insurance (In-transit) were Rs.3,000 and Rs.800 respectively.
  5. Installation charges were 15000.
  6. Full and final payment were made on 28th Jan 20XX.

Required:

a). Determine the cost of water filtration plant that should be capitalised in the books of ABC Limited on 1st Jan 20XX.

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