Expense not included in the acquisition of plant

When a company acquires a plant, there are certain expenses that are included in the acquisition cost and some which are not. The expense that is not included in the acquisition cost of the plant is explained below:

Annual Maintenance Charges

Annual maintenance charges are the expenses incurred by a company for the upkeep and maintenance of the plant throughout its useful life. These expenses are recurring in nature and are incurred every year. However, these expenses are not included in the acquisition cost of the plant because they are not related to the initial acquisition of the plant.

Expenses included in the acquisition of plant

The following expenses are included in the acquisition cost of the plant:

Purchase Price of Plant

The purchase price of the plant is the amount that a company pays to acquire the plant. This includes the cost of the plant, any taxes or duties payable on the purchase, and any discounts or rebates received.

Installation Expenses

Installation expenses include the cost of transporting the plant to the site, the cost of setting up the plant, and any other expenses related to the installation of the plant. These expenses are necessary to make the plant operational and are therefore included in the acquisition cost.

Delivery Charges of the Plant

Delivery charges of the plant include the cost of transporting the plant from the supplier to the company's premises. These expenses are necessary to get the plant to the company's premises and are therefore included in the acquisition cost.

Conclusion

In conclusion, the expense that is not included in the acquisition cost of the plant is the annual maintenance charges. All other expenses related to the acquisition of the plant are included in the acquisition cost, including the purchase price of the plant, installation expenses, and delivery charges of the plant.