Financial Reporting and Analysis Q250

250A company recently purchased a warehouse property and related equipment for €20 million. The company incurred the following additional costs:
• €1.0 million for repairs to the building’s roof
• €0.3 million to modify the interior layout to meet their needs (moving walls and doors, inserting and removing partitions, etc.)
• €0.2 million on an orientation and training session for employees to familiarize them with the facility The cost to be capitalized (in millions) for accounting purposes is closest to:

Option : B
Explanation : The capitalized amount = purchase price + costs that are involved in extending asset’s life or getting it ready to use = 20 + 1 + 0.3 = 21.3. Orientation and training costs are expensed during the period.

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