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4 January, 20:58

Mark's Markers purchased a new machine to use in the manufacturing process for $2,500. The sales tax was an additional $150 and the shipping charges were $200. One month after using the machine, a small part broke and needed repair. The cost of the repair was $900. How will Mark's Markers treat the costs for tax purposes?

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  1. 5 January, 00:50
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    Given that

    Purchase value of a new machine = $2,500

    Sales tax = $150

    Shipping charges = $200

    After one month, The cost of repair = $900

    So for the tax purposes, the total value of machine i. e

    = Purchase value of a new machine + Sales tax + shipping charges

    = $2,500 + $150 + $200

    = $2,850

    This whole amount is capitalized and it would also deprecated over its useful life

    Whereas the cost of the repair is an expense so it would be charged instantly.
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