A vehicle is purchased by ABC Co. The vehicle cost $35,000 and has a useful life of 5 years or 100,000 miles with a salvage value of $3,000 at the end of its useful life. There is a 6 percent sales tax due on the vehicle upon registration with the Registry of Motor Vehicles, and the registration fee is $120 in order to get new plates. Every year a $75 dollar license renewal fee is charged by the Registry. After six months, the vehicle is brought to the dealer for a $75.00 oil and filter change. In its six months of operation, it has a flat tire that cost $35 to repair. Two years down the road, the engine of the truck seizes and an engine replacement is performed, which cost $3,000. With regard to the above example, which of these expenditures are capitalized, and which are expensed? The cost of the vehicle The sales tax The plate and registration fee Annual registration fee The oil and filter change The flat tire repair The engine replacement
2. A vehicle is purchased by ABC Co. The vehicle cost $35,000 and has a useful life of 5 years or 100,000 miles with a salvage value of $3,000 at the end of its useful life. There is a 6 percent sales tax due on the vehicle upon registration with the Registry of Motor Vehicles, and the registration fee is $120 in order to get new plates. Every year a $75 dollar license renewal fee is charged by the Registry. After six months, the vehicle is brought to the dealer for a $75.00 oil and filter change. In its six months of operation, it has a flat tire that cost $35 to repair. Two years down the road, the engine of the truck seizes and an engine replacement is performed, which cost $3,000.
With regard to the above example, which of these expenditures are capitalized, and which are expensed?
The cost of the vehicle
The sales tax
The plate and registration fee
Annual registration fee
The oil and filter change
The flat tire repair
The engine replacement
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