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Cost of machinery includes the purchase price and all expenditures directly attributable to bring in the machinery into working condition and use.
The following will be charged to machinery account:
Description Amount in Rs
Invoice Price 800,000
Custom and installation 50,000
Installation and erection 10,000
Damaged part installation 9,000
Total Cost 869,000
The above costs are directly attributable to the machinery and will consequently bring it into working condition. Training cost is assumed to be incurred afterwards and is, therefore, not accounted for as direct cost.
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