During 2014, ABC installed a production assembly line . In 2015, ABC purchased a

Question

During 2014, ABC installed a production assembly line . In 2015, ABC purchased a new machine and rearranged the assembly line to install this machine Not yet answered ngement did not increase the estimated useful life of the assembly line, but it did result in significantly more efficient production The following expenditures were incurred in connection with this project $138300 for machine $126500 labor to install machine $123000 parts added in rearranging the assembly line to provide future benefits $100400 labor and overhead to rearrange the assembly line o o o o The amount of the expenditures that should be capitalized in 2015 is Answer:

Explanation / Answer

Amounts to be capitalized in Year 2015:

Since rearrangement of assembly line did not results in increase of estimated useful life of assembly line, $ 100,400 that is paid towards labour & overhead to rearrange the assembly line shall not be capitalised.

Purchase of Machine          1,38,300 Installation of Machine          1,26,500 Parts cost resulting in future benefits          1,23,000 Total          3,87,800

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