Martinez Co. recently installed some new computer equipment. To prepare for the installation, Martinez had some electrical work done in what was to become the server room, costing $19,400. The invoice price of the server equipment was $196,000. Three printers were also purchased at a cost of $2,100 each. The software for the system was an additional $45,100. 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, it cost $13,200 for delivery. 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 $9,850. Assume that Martinez follows IFRS, and that any allocation of common costs is done to the nearest 1% (e.g., 80%, 6%, 14%). (b) Assume that Martinez 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% and final answers to O decimal places, e.g. 5,275.) Cost Server equipment $ Printers $ Software $
Martinez Co. recently installed some new computer equipment. To prepare for the installation, Martinez had some electrical work done in what was to become the server room, costing $19,400. The invoice price of the server equipment was $196,000. Three printers were also purchased at a cost of $2,100 each. The software for the system was an additional $45,100. 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, it cost $13,200 for delivery. 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 $9,850. Assume that Martinez follows IFRS, and that any allocation of common costs is done to the nearest 1% (e.g., 80%, 6%, 14%). (b) Assume that Martinez 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% and final answers to O decimal places, e.g. 5,275.) Cost Server equipment $ Printers $ Software $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Munabhai
Transcribed Image Text:Martinez Co. recently installed some new computer equipment. To prepare for the installation, Martinez had some electrical work
done in what was to become the server room, costing $19,400. The invoice price of the server equipment was $196,000. Three
printers were also purchased at a cost of $2,100 each. The software for the system was an additional $45,100. 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, it cost $13,200 for delivery. 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 $9,850. Assume that
Martinez follows IFRS, and that any allocation of common costs is done to the nearest 1% (e.g., 80%, 6%, 14%).
(b) Assume that Martinez 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% and final
answers to O decimal places, e.g. 5,275.)
Server equipment
Printers
Software
+A
$
Cost
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