1. **State the problem:** We need to find the total cost of the printing machine to be reported in the company's statement of financial position. 2. **Identify the costs involved:** - Cost of the machine: Sh.80,000 - Installation costs: Sh.5,000 - Training costs: Sh.2,000 - Test costs (paper and ink): Sh.1,000 3. **Understand accounting rules:** According to accounting principles, the cost of an asset includes all costs necessary to bring the asset to working condition for its intended use. This includes purchase price, installation, and other directly attributable costs. 4. **Apply the rule:** - The cost of the machine: Sh.80,000 (included) - Installation costs: Sh.5,000 (included) - Training costs: Sh.2,000 (usually expensed, not capitalized) - Test costs: Sh.1,000 (included as part of getting the machine ready) 5. **Calculate total cost:** $$\text{Total cost} = 80,000 + 5,000 + 1,000 = 86,000$$ 6. **Conclusion:** The cost of the machine to be reported is Sh.86,000. **Final answer:** Option 3, Sh.86,000.