Buffalo Co. recently installed some new computer equipment. To prepare for the installation, Buffalo had some electrical work done in what was to become the server room, costing $18,000. The invoice price of the server equipment was $190,000. Three printers were also purchased at a cost of $1,800 each. The software for the system was an additional $42,000. The server equipment was believed to have a useful life of eight years, but due to the heavy anticipated usage, the printers were expected to have only a four-year useful life. The software to run the system was estimated to require a complete upgrade in five years to avoid obsolescence. Additionally, delivery costs of $10,000 was incurred for all items above. All of the above costs were subject to a 6% non-refundable provincial sales tax. During the installation, a training course was conducted for the staff that would be using the new equipment, at a cost of $9.500. Assume that Buffalo follows IFRS, and that any allocation of common costs is done to the nearest 1% (e.g.. 80%, 6%, 14%). (b) Assume that Buffalo decides to capitalize the following components of the computer system: server equipment, printers, and software. Calculate the amount to be capitalized for each of these asset groups. (Round percentage to O decimal places, e.g. 52%. Round answers to O decimal places, e.g. 5,275.) Server equipment Printers Software $ $ $ Cost 223809,44 6360.90 49473.66
Buffalo Co. recently installed some new computer equipment. To prepare for the installation, Buffalo had some electrical work done in what was to become the server room, costing $18,000. The invoice price of the server equipment was $190,000. Three printers were also purchased at a cost of $1,800 each. The software for the system was an additional $42,000. The server equipment was believed to have a useful life of eight years, but due to the heavy anticipated usage, the printers were expected to have only a four-year useful life. The software to run the system was estimated to require a complete upgrade in five years to avoid obsolescence. Additionally, delivery costs of $10,000 was incurred for all items above. All of the above costs were subject to a 6% non-refundable provincial sales tax. During the installation, a training course was conducted for the staff that would be using the new equipment, at a cost of $9.500. Assume that Buffalo follows IFRS, and that any allocation of common costs is done to the nearest 1% (e.g.. 80%, 6%, 14%). (b) Assume that Buffalo decides to capitalize the following components of the computer system: server equipment, printers, and software. Calculate the amount to be capitalized for each of these asset groups. (Round percentage to O decimal places, e.g. 52%. Round answers to O decimal places, e.g. 5,275.) Server equipment Printers Software $ $ $ Cost 223809,44 6360.90 49473.66
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Buffalo Co. recently installed some new computer equipment. To prepare for the installation, Buffalo had some electrical work done in
what was to become the server room, costing $18,000. The invoice price of the server equipment was $190,000. Three printers were
also purchased at a cost of $1,800 each. The software for the system was an additional $42,000. The server equipment was believed to
have a useful life of eight years, but due to the heavy anticipated usage, the printers were expected to have only a four-year useful life.
The software to run the system was estimated to require a complete upgrade in five years to avoid obsolescence. Additionally, delivery
costs of $10,000 was incurred for all items above. All of the above costs were subject to a 6% non-refundable provincial sales tax.
During the installation, a training course was conducted for the staff that would be using the new equipment, at a cost of $9.500.
Assume that Buffalo follows IFRS, and that any allocation of common costs is done to the nearest 1% (e.g., 80%, 6%, 14%).
(b) Assume that Buffalo decides to capitalize the following components of the computer system: server equipment, printers, and
software. Calculate the amount to be capitalized for each of these asset groups. (Round percentage to O decimal places, e.g. 52%. Round
answers to 0 decimal places, e.g. 5,275.)
Server equipment
Printers
Software-
$
$
$
Cost
223809,44
6360.90
49473.66
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