On 31 March 2014, BizOps purchased a wrapping machine to wrap widgets prior to boxing for retail sale. The machine’s serial number is…

On 31 March 2014, BizOps purchased a wrapping machine to wrap widgets prior to boxing for retail sale. The machine’s serial number is VMM06JKTR0460275 and it was purchased from Mills Machinery Ltd. The machine is located in Warehouse 4. The total purchase price was $110,000, including GST. The residual value for the wrapping machine is estimated to be $15,000. Its expected useful life is 15 years.

At the date of purchase, costs incurred (including GST) were:

• Insurance – $1,540

• Freight charges – $660

• Repair of damage in transit – $462

Further costs incurred during installation and testing totalled $2,508, including GST. These costs are not of a recurring nature.

Depreciation on the machine is to be 10 per cent using the reducing-balance method (rounded to the nearest whole dollar).

On 30 September 2016, the company decided to trade in the machine for $82,500 (including GST) on an upgraded machine with a total capital cost of $137,500 (including GST).

 The balance owing was paid by cheque number 102374.

Could you help me how to calculate the capital cost?