Capital and Revenue Expenditures Kimbrell Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service: Classify each of the costs as either a capital expenditure or a revenue expenditure. Choose a C for capital or an R for revenue in the box following the item. 1.Changed the oil and greased the joints of all the trucks and vans. 2.Installed a hydraulic lift to a van 3.Installed a new engine in a truck purchased three years ago 4.Repaired a flat tire on one of the vans 5.Installed a refrigeration unit on a truck to equip it to carry perishable goods

Answered: Capital and Revenue Expenditures…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 19E

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Capital and Revenue Expenditures

Kimbrell Freight Lines Co. incurred the following costs related to trucks and vans used in operating
its delivery service:

Classify each of the costs as either a capital expenditure or a revenue expenditure.
Choose a C for capital or an R for revenue in the box following the item.

1.	Changed the oil and greased the joints of all the trucks and vans.

2.	Installed a hydraulic lift to a van

3.	Installed a new engine in a truck purchased three years ago

4.	Repaired a flat tire on one of the vans

5.	Installed a refrigeration unit on a truck to equip it to carry perishable goods

Expert Solution

Step 1

Revenue expenditure is regular expenses which is low amount in nature. This is operating expenses which gives benefits for short period of time.

Capital expenditure is large investment which increase capacity of existing fixed asset or purchase of new fixed asset.

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