(Learning Objective 2: Distinguish capital expenditures from expenses) AssumeKaro Products, Inc., purchased conveyor-belt machinery. Classify each of the following expenditures as a capital expenditure or an immediate expense related to machinery:a. Periodic lubrication after the machinery is placed in serviceb. Special reinforcement to the machinery platformc. Major overhaul to extend the machinery’s useful life by five yearsd. Training of personnel for initial operation of the machinerye. Purchase pricef. Income tax paid on income earned from the sale of products manufactured by themachineryg. Ordinary repairs to keep the machinery in good working orderh. Transportation and insurance while machinery is in transit from seller to buyeri. Sales tax paid on the purchase pricej. Lubrication of the machinery before it is placed in servicek. Installation of the conveyor-belt machinery
(Learning Objective 2: Distinguish capital expenditures from expenses) Assume
Karo Products, Inc., purchased conveyor-belt machinery. Classify each of the following expenditures as a capital expenditure or an immediate expense related to machinery:
a. Periodic lubrication after the machinery is placed in service
b. Special reinforcement to the machinery platform
c. Major overhaul to extend the machinery’s useful life by five years
d. Training of personnel for initial operation of the machinery
e. Purchase price
f. Income tax paid on income earned from the sale of products manufactured by the
machinery
g. Ordinary repairs to keep the machinery in good working order
h. Transportation and insurance while machinery is in transit from seller to buyer
i. Sales tax paid on the purchase price
j. Lubrication of the machinery before it is placed in service
k. Installation of the conveyor-belt machinery
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