**Plant Asset Cost**Listed below are certain costs (or discounts) incurred in the purchase or construction of new plant assets. (1) Indicate whether the costs should be *expensed* or *capitalized* (meaning they are included in the cost of the plant assets on the balance sheet). (2) For costs that should be included in plant assets, indicate in which category of plant assets (Equipment, Building, or Land) the related costs should be recorded on the balance sheet.| | ||----------------|---------------------|| Expensed or | Asset Category || Capitalized | || | || | || | || | || | || | |1. Charges incurred to train employees to use new equipment2. Invoice cost to purchase new equipment3. Deduction for an early payment discount taken on the purchase of new equipment4. Real estate commissions incurred on land purchased for a new plant5. Property taxes on land incurred after it was purchased6. Costs of tune-up for the truck used to deliver new equipment7. Costs to lay the foundation for a new building8. Insurance on a new building during the construction phase

Answered: Plant Asset Cost Listed below are…

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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**Plant Asset Cost**

Listed below are certain costs (or discounts) incurred in the purchase or construction of new plant assets. (1) Indicate whether the costs should be *expensed* or *capitalized* (meaning they are included in the cost of the plant assets on the balance sheet). (2) For costs that should be included in plant assets, indicate in which category of plant assets (Equipment, Building, or Land) the related costs should be recorded on the balance sheet.

| | |
|----------------|---------------------|
| Expensed or | Asset Category |
| Capitalized | |
| | |
| | |
| | |
| | |
| | |
| | |

1. Charges incurred to train employees to use new equipment
2. Invoice cost to purchase new equipment
3. Deduction for an early payment discount taken on the purchase of new equipment
4. Real estate commissions incurred on land purchased for a new plant
5. Property taxes on land incurred after it was purchased
6. Costs of tune-up for the truck used to deliver new equipment
7. Costs to lay the foundation for a new building
8. Insurance on a new building during the construction phase

Expert Solution

Step 1: Introduction:

Capital expenditure are those expenditure that have enduring benefits and will be capitalised if the efficiency or future economic benefits are flowing to the enterprises.

Revenues expenditure are charged as an expenses in the Income Statement in the year in which they are incurred

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