Question

IAS 16. Fixed Assets. We are a graphic arts company, and at the beginning of 2019, we acquired a new printer. The price of this printer was 30,000 euros. The additional expenses of the purchase were as follows:

• Installation and assembly: 4.000 euros.
• Transportation and delivery: 2.150 euros.

All operations have a 21% VAT (not included), and the payment of the amounts is made by bank check.

During January, the assembly and installation of the new printer takes place, which is in perfect working condition from February the 1st.

The useful life expectancy of the printer is estimated at 10 years, and its amortisation will be carried out following the linear method. Additionally, at the end of its useful life, the company will have to face the costs of dismantling and rehabilitation of the place. Estimating said costs in 5,000 euros. Besides, said machinery requires specialised weekly maintenance, amounting to 250 euros per month.

Calculate:

• The initial cost of the acquisition.
• The amortization fees.
• The costs derived from daily maintenance.

Answer 1

1. Intial Cost of Acquisition:

   • Details	Amount
     Printer Price	30,000
     Installation and assembly	4,000
     Transportation and delivery	2,150
     Total Acquisition cost before Taxes	36,150
     VAT @ 21%	7,591.50
     Initial Cost of Acquisition of Printer	43,741.50

2. Amortization as per Linear Method:
   • Total cost for Amortization should include estimated dismantaling and rehabilitation of the place expense at the end of life of the fixed asset.
   • So, Total cost of Amortization = 48,741.50 euros ( 43,741.50 + 5000)
   • Useful Life expectancy of Printer = 10 Years
   • Amortaization cost per Year = 4,874.15 euros ( 48,741.50 / 10 Years)
3. The costs derived from daily maintenance:
   • ​​​​​​​Monthly Maintenance cost = 250 Euros
   • Weekly Maintenance cost = 62.5 Euros ( 250 / 4)
   • Daily Maintenance Cost = 8.93 Euros ( 62.5 / 7)