Busi Ngidi is the sole proprietor of Ngidi's Clothing Manufacturers which was renting property in an industrial park. To expand her operations, Ngidi's purchased its own property, demolish the old building, construct a new building and install new equipment.
The following costs were made available Ignore VAT implications:
Equipment
R
Purchase price of equipment 400 000
Cost of transport and installation of equipment 70 000
Fine paid for illegal transport of equipment 10 000
Property
R
Purchase price of property 840 000
Legal and transfer fees 21 000
Cost of demolishing old building 30 000
Proceeds from sale of old building material 9 000
Architect's and engineers' fees 16 000
Cost of construction of new building 502 000
Problem 1: Determine which one of the following amounts represents the total capitalised cost of the asset, property.
A) R1 400 000
B) R1 363 000
C) R1 418 000
D) R1 379 000
Problem 2: Using the information for Ngidi's Clothing Manufacturers supplied in 1.1.2 above, determine which one of the following amounts represents the total capitalised cost of the asset, equipment.
A) R400 000
B) R470 000
C) R480 000
D) R460 000