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    Trooper Medical Labs

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    Troopers Medical Labs, Inc. began operations 5 years ago producing stetrics, a new type of instrument it hoped to sell to doctors, dentists, and hospitals. The demand for stetrics far exceeded initial expectations, and the company was unable to produce enough to meet demand.

    The company was manufacturing its product on equipment that it built at the start of its operations. To meet demand, more efficient equipment was needed. The company decided to design and build the equipment, because the equipment currently available on the market was unsuitable for producing stetrics.

    In 2010, a section of the plant was devoted to development of the new equipment and a special staff was hired. Within 6 months a machine developed at a cost of $714,000 increased production dramatically and reduced labor costs substantially. Elated by the success of the new machine, the company built three more machines of the same type at a cost of $441,000 each.

    Instructions:
    In general, what costs should be capitalized for self-constructed equipment?

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    https://brainmass.com/business/accounting/trooper-medical-labs-374752

    Solution Preview

    Troopers medical Labs, Inc. began operations 5 years ago producing stetrics, a new type of instrument it hoped to sell to doctors, dentists, and hospitals. The demand for stetrics far exceeded initial expectations, and the company was unable to produce enough to meet demand.

    The company was manufacturing its product on equipment that it built at the start of its operations. To meet demand, more efficient equipment was needed. The company ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what costs should be capitalized for self-constructed equipment.

    $2.19

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