Practice Question 5: Acquisition of Personal computers.

Difficulty level: Normal.

On July 1st 20XX,
Mr Hussnain acquired 10 computer system having a list price of Rs. 140,400 each from “Qualitative computers”. following are the other transactions related to this acquisition.

1. Sales tax @ 17% included in list price (refundable).
2. Trade discount allowed@ 10%.
3. Cash discount allowed@ 5% if final payment was made before 25th July.
4. Transportation charges Rs.5000.
5. Insurance (In-transit) Rs.12000.
6. Installation charges Rs.600 each.
7. Mr hussnain also signed a maintenance contract for 2 years. The computers will be provided monthly service from qualitative computers for Rs.200 per annum.

REQUIRED:

Compute the cost that should be capitalised in the books of Mr Hussnain.