Question

The business purchased a new van for $70 000 + GST, installation of shelving was $5000+GST, they had the windows tinted for $2000 + GST and bought a $30 + GST air freshener for the van, what is the van valued at, explain treatment of air freshener.

Answer 1

The value of the van is calculated by adding the costs of the van, shelving, and window tinting, including GST, with the air freshener’s cost typically treated as a small, expensed item.

Step-by-step explanation:

The total value of the van would be calculated by adding up the costs of the purchase and improvements, which includes Goods and Services Tax (GST). Starting with the van's purchase price of $70,000 plus GST, the installation of shelving at $5,000 plus GST, window tinting for $2,000 plus GST, and a $30 plus GST air freshener. The value of the air freshener is minimal in comparison to the other expenditures, and it is typically treated as an expense rather than a capital improvement, which means it wouldn't typically be added to the van's value in an accounting context.