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When a capital asset is purchased, its cost includes the purchase price plus all costs to prepare the asset for its intended use. However, a company may construct its own building or equipment. In the case of a building, for example, costs include those incurred for excavation, building permits, insurance and property taxes during construction, engineering fees, the cost of labour incurred by having company employees supervize and work on the construction of the building, and the cost of any interest incurred to finance the construction during the construction period.
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