Saica Practice Test & Exam Prep | South Africa

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Under IAS 16 Property, Plant and Equipment, an entity acquires machinery for R2 000 000, incurs initial delivery costs of R100 000, installation costs of R150 000, administrative overheads of R50 000, and initial operating losses of R80 000 before reaching full capacity. What is the initial cost of the machinery recognized under IAS 16?

R2 250 000 R2 300 000 R2 380 000 R2 000 000

Correct Answer:

R2 250 000

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