Capitalization of asset expenditure: Whenever any capital asset is acquired for business the amount paid for the purchase, installation and initial repair or rework cost has to be capitalized i.e., debited to the capital asset or fixed asset account. This is general accepted accounting principle. This method is called as capitalization of an asset. Any further expense incurred such as minor repair, annual maintenance cost has to be charges to Profit & Loss Account. To indicate: The expenditure that is not recorded as cost of building.

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Answer 1

Question

Chapter 10, Problem 1QC

To determine

Capitalization of asset expenditure:

Whenever any capital asset is acquired for business the amount paid for the purchase, installation and initial repair or rework cost has to be capitalized i.e., debited to the capital asset or fixed asset account. This is general accepted accounting principle. This method is called as capitalization of an asset. Any further expense incurred such as minor repair, annual maintenance cost has to be charges to Profit & Loss Account.

To indicate:

The expenditure that is not recorded as cost of building.

Expert Solution & Answer

Answer to Problem 1QC

Solution:

Annual building maintenance should not be recorded as cost of a building.

Explanation of Solution

Since this expenditure is incurred after the asset came into existence and not related to the asset and has to be incurred yearly, this has to be charges to Profit & Loss Account as expenses.

Conclusion:

Annual building maintenance should not be recorded as part of building.

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Students have asked these similar questions

The output of a company's mixing department during the period consists of 24,800 units completed and transferred out, and 14,300 units in ending Work in Process that were 30% complete as to materials and conversion costs. The beginning inventory was 16,800 units that were 10% complete as to materials and conversion costs. Under the weighted-average method, what are the equivalent units of production for materials? a. 30,770 b. 29,090 c. 24,800 d. 4,290

General Accounting

On March 1, 2019, Baltimore Company's beginning work in process inventory had 6,000 units. This is its only production department. Beginning WIP units were 50% complete to conversion costs. Baltimore introduces direct materials at the beginning of the production process. During March, a total of 23,200 units were started and the ending WIP inventory had 8,600 units which were 30% complete to conversion costs. Baltimore uses the weighted average method. Use this information to determine for March 2019 the equivalent units of production for conversion costs.

Answer 2

Question

Chapter 10, Problem 1QC

To determine

Capitalization of asset expenditure:

Whenever any capital asset is acquired for business the amount paid for the purchase, installation and initial repair or rework cost has to be capitalized i.e., debited to the capital asset or fixed asset account. This is general accepted accounting principle. This method is called as capitalization of an asset. Any further expense incurred such as minor repair, annual maintenance cost has to be charges to Profit & Loss Account.

To indicate:

The expenditure that is not recorded as cost of building.

Expert Solution & Answer

Answer to Problem 1QC

Solution:

Annual building maintenance should not be recorded as cost of a building.

Explanation of Solution

Since this expenditure is incurred after the asset came into existence and not related to the asset and has to be incurred yearly, this has to be charges to Profit & Loss Account as expenses.

Conclusion:

Annual building maintenance should not be recorded as part of building.

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Answer 3

Question

Chapter 10, Problem 1QC

To determine

Capitalization of asset expenditure:

Whenever any capital asset is acquired for business the amount paid for the purchase, installation and initial repair or rework cost has to be capitalized i.e., debited to the capital asset or fixed asset account. This is general accepted accounting principle. This method is called as capitalization of an asset. Any further expense incurred such as minor repair, annual maintenance cost has to be charges to Profit & Loss Account.

To indicate:

The expenditure that is not recorded as cost of building.

Expert Solution & Answer

Answer to Problem 1QC

Solution:

Annual building maintenance should not be recorded as cost of a building.

Explanation of Solution

Since this expenditure is incurred after the asset came into existence and not related to the asset and has to be incurred yearly, this has to be charges to Profit & Loss Account as expenses.

Conclusion:

Annual building maintenance should not be recorded as part of building.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 1QC

To determine

Capitalization of asset expenditure:

Whenever any capital asset is acquired for business the amount paid for the purchase, installation and initial repair or rework cost has to be capitalized i.e., debited to the capital asset or fixed asset account. This is general accepted accounting principle. This method is called as capitalization of an asset. Any further expense incurred such as minor repair, annual maintenance cost has to be charges to Profit & Loss Account.

To indicate:

The expenditure that is not recorded as cost of building.

Expert Solution & Answer

Answer to Problem 1QC

Solution:

Annual building maintenance should not be recorded as cost of a building.

Explanation of Solution

Since this expenditure is incurred after the asset came into existence and not related to the asset and has to be incurred yearly, this has to be charges to Profit & Loss Account as expenses.

Conclusion:

Annual building maintenance should not be recorded as part of building.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 1QC

To determine

Capitalization of asset expenditure:

Whenever any capital asset is acquired for business the amount paid for the purchase, installation and initial repair or rework cost has to be capitalized i.e., debited to the capital asset or fixed asset account. This is general accepted accounting principle. This method is called as capitalization of an asset. Any further expense incurred such as minor repair, annual maintenance cost has to be charges to Profit & Loss Account.

To indicate:

The expenditure that is not recorded as cost of building.

Expert Solution & Answer

Answer to Problem 1QC

Solution:

Annual building maintenance should not be recorded as cost of a building.

Explanation of Solution

Since this expenditure is incurred after the asset came into existence and not related to the asset and has to be incurred yearly, this has to be charges to Profit & Loss Account as expenses.

Conclusion:

Annual building maintenance should not be recorded as part of building.

Answer 6

Chapter 10, Problem 1QC

To determine

Capitalization of asset expenditure:

Whenever any capital asset is acquired for business the amount paid for the purchase, installation and initial repair or rework cost has to be capitalized i.e., debited to the capital asset or fixed asset account. This is general accepted accounting principle. This method is called as capitalization of an asset. Any further expense incurred such as minor repair, annual maintenance cost has to be charges to Profit & Loss Account.

To indicate:

The expenditure that is not recorded as cost of building.

Expert Solution & Answer

Answer to Problem 1QC

Solution:

Annual building maintenance should not be recorded as cost of a building.

Explanation of Solution

Since this expenditure is incurred after the asset came into existence and not related to the asset and has to be incurred yearly, this has to be charges to Profit & Loss Account as expenses.

Conclusion:

Annual building maintenance should not be recorded as part of building.

Answer 7

Chapter 10, Problem 1QC

To determine

Capitalization of asset expenditure:

Whenever any capital asset is acquired for business the amount paid for the purchase, installation and initial repair or rework cost has to be capitalized i.e., debited to the capital asset or fixed asset account. This is general accepted accounting principle. This method is called as capitalization of an asset. Any further expense incurred such as minor repair, annual maintenance cost has to be charges to Profit & Loss Account.

To indicate:

The expenditure that is not recorded as cost of building.

Answer 8

Expert Solution & Answer

Answer to Problem 1QC

Solution:

Annual building maintenance should not be recorded as cost of a building.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Since this expenditure is incurred after the asset came into existence and not related to the asset and has to be incurred yearly, this has to be charges to Profit & Loss Account as expenses.

Conclusion:

Annual building maintenance should not be recorded as part of building.