If a second-hand machine is purchased for operational use in a business, all renovation and repair costs on the used machine incurred by the purchaser prior to its operational use should be excluded from the cost of the asset.

Question

Quizplus · Accepted Answer

Renovation and repair costs incurred to prepare a second-hand machine for its intended use should be included in the asset's cost, as they are necessary to bring the asset to the condition and location necessary for it to operate in the manner intended by management.

If a Second-Hand Machine Is Purchased for Operational Use in a Business