Further, Nick incurred additional expenses in relation to his rental properties as follows:Expense($)Repairs to the roof of the rental property following a severe storm6,000Replacement of the central air conditioning system in the rental property5,000 Based on the above facts and relevant tax laws, how should you treat the following expenses? AFully deduct the air conditioning system related costs while only claiming the decline in value of the roof according to its effective life. BFully deduct the roof related costs while only claiming the decline in value of the air conditioning system according to its effective life. CInclude the full amount of $11,000 as repairs and maintenance expense DAs they are both very expensive items, they are capital in nature and only the decline in value according to its effective life for both items can be claimed.

Revenue Expenses: These are expenses incurred in the ordinary course of renting out a property, and…

Answered: Further, Nick incurred additional…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Further, Nick incurred additional expenses in relation to his rental properties as follows:

Expense	($)
Repairs to the roof of the rental property following a severe storm	6,000
Replacement of the central air conditioning system in the rental property	5,000

Based on the above facts and relevant tax laws, how should you treat the following expenses?

	A	Fully deduct the air conditioning system related costs while only claiming the decline in value of the roof according to its effective life.
	B	Fully deduct the roof related costs while only claiming the decline in value of the air conditioning system according to its effective life.
	C	Include the full amount of $11,000 as repairs and maintenance expense
	D	As they are both very expensive items, they are capital in nature and only the decline in value according to its effective life for both items can be claimed.

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