Bundle: Accounting, Chapters 1-13, 26th + Working Papers, Chapters 1-17 For Warren/reeve/duchac's Accounting, 26th And Financial Accounting, 14th + ... For Warren/reeve/duchac's Accounting, 26th
26th Edition
ISBN: 9781337498159
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 10, Problem 10.4EX
To determine
Capital expenditure: It refers to the amount spent on acquiring, maintaining, and improving the fixed assets that increases its productivity or extends useful life. It provides benefits in the future period.
Revenue expenditure: It refers to the amount spent on normal maintenance and repairs of fixed assets to generate revenue in the current period. It provides benefits only in the current period.
To classify: each of the given costs as a capital expenditure or as revenue expenditure.
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Capital and Revenue Expenditures
Warner Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service:
Classify each of the costs as a capital expenditure or a revenue expenditure.
Cost
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1.
Changed the oil and greased the joints of all the trucks and vans.
2.
Changed the radiator fluid on a truck that had been in service for the past four years.
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Installed a hydraulic lift to a van.
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Overhauled the engine on one of the trucks purchased three years ago.
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Rebuilt the transmission on one of the vans that had been driven 40,000 miles. The van was no longer under warranty.
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Removed a two-way radio from one of the trucks and installed a new radio with a greater range of communication.
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Repaired a flat tire on one of the vans.
9.
Replaced a truck's suspension system with a new suspension system that allows for the delivery of heavier loads.
10. Tinted the back…
US Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service:1. Installed GPS systems on the trucks.2. Replaced the transmission fluid on a truck that had been in service for the past four years.3. Overhauled the engine on one of the trucks purchased three years ago.4. Performed annual service of installing new spark plugs, changing the oil, and greasing the joints of all trucks and vans.5. Rebuilt the engine on one of the vans that had been driven 80,000 miles.6. Repaired a flat tire on one of the vans.7. Installed a hydraulic lift to a truck.8. Tinted the back and side windows of the vans and installed a security system to discourage theft of contents.9. Replaced a truck’s suspension system with a new suspension system, allowing for heavier loads.10. Installed an optional third-row seat on one of the vans.Classify each of the costs as a capital expenditure or a revenue expenditure.
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
Chapter 10 Solutions
Bundle: Accounting, Chapters 1-13, 26th + Working Papers, Chapters 1-17 For Warren/reeve/duchac's Accounting, 26th And Financial Accounting, 14th + ... For Warren/reeve/duchac's Accounting, 26th
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