A company incurs a cost for a part that is needed to repair a piece of equipment. Is the cost an asset or an expense? Explain.

Question

Want to see more full solutions like this?

Answer 1

Textbook Question

Chapter 2, Problem 1DQ

A company incurs a cost for a part that is needed to repair a piece of equipment. Is the cost an asset or an expense? Explain.

Expert Solution & Answer

To determine

Explain whether the repair cost is an asset or an expense.

Explanation of Solution

Explain whether the repair cost is an asset or an expense.

In general, all equipment requires normal repair. So, this costs are considered as on-going cost of business and classified as expenses. Though, it is argued as repair is the major part for the equipment’s and such major repair is done for every five years and this expense will benefit for upcoming years. Therefore, it could be recorded as an asset.

Want to see more full solutions like this?

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

Students have asked these similar questions

Under variable costing total period costs are?

What is the amount of the annual net income for this financial accounting question?

MCQ

Answer 2

Textbook Question

Chapter 2, Problem 1DQ

A company incurs a cost for a part that is needed to repair a piece of equipment. Is the cost an asset or an expense? Explain.

Expert Solution & Answer

To determine

Explain whether the repair cost is an asset or an expense.

Explanation of Solution

Explain whether the repair cost is an asset or an expense.

In general, all equipment requires normal repair. So, this costs are considered as on-going cost of business and classified as expenses. Though, it is argued as repair is the major part for the equipment’s and such major repair is done for every five years and this expense will benefit for upcoming years. Therefore, it could be recorded as an asset.

Want to see more full solutions like this?

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

Answer 3

Textbook Question

Chapter 2, Problem 1DQ

A company incurs a cost for a part that is needed to repair a piece of equipment. Is the cost an asset or an expense? Explain.

Expert Solution & Answer

To determine

Explain whether the repair cost is an asset or an expense.

Explanation of Solution

Explain whether the repair cost is an asset or an expense.

In general, all equipment requires normal repair. So, this costs are considered as on-going cost of business and classified as expenses. Though, it is argued as repair is the major part for the equipment’s and such major repair is done for every five years and this expense will benefit for upcoming years. Therefore, it could be recorded as an asset.

Want to see more full solutions like this?

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

Answer 4

Textbook Question

Chapter 2, Problem 1DQ

A company incurs a cost for a part that is needed to repair a piece of equipment. Is the cost an asset or an expense? Explain.

Expert Solution & Answer

To determine

Explain whether the repair cost is an asset or an expense.

Explanation of Solution

Explain whether the repair cost is an asset or an expense.

In general, all equipment requires normal repair. So, this costs are considered as on-going cost of business and classified as expenses. Though, it is argued as repair is the major part for the equipment’s and such major repair is done for every five years and this expense will benefit for upcoming years. Therefore, it could be recorded as an asset.

Want to see more full solutions like this?

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

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Explain whether the repair cost is an asset or an expense.

Explanation of Solution

Explain whether the repair cost is an asset or an expense.

In general, all equipment requires normal repair. So, this costs are considered as on-going cost of business and classified as expenses. Though, it is argued as repair is the major part for the equipment’s and such major repair is done for every five years and this expense will benefit for upcoming years. Therefore, it could be recorded as an asset.

Answer 8

Expert Solution & Answer

To determine

Explain whether the repair cost is an asset or an expense.

Explanation of Solution

Explain whether the repair cost is an asset or an expense.

In general, all equipment requires normal repair. So, this costs are considered as on-going cost of business and classified as expenses. Though, it is argued as repair is the major part for the equipment’s and such major repair is done for every five years and this expense will benefit for upcoming years. Therefore, it could be recorded as an asset.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Explain whether the repair cost is an asset or an expense.

Answer 12

Explanation of Solution

Explain whether the repair cost is an asset or an expense.

In general, all equipment requires normal repair. So, this costs are considered as on-going cost of business and classified as expenses. Though, it is argued as repair is the major part for the equipment’s and such major repair is done for every five years and this expense will benefit for upcoming years. Therefore, it could be recorded as an asset.

Answer 13

Ch. 2 - A company incurs a cost for a part that is needed...Ch. 2 - Prob. 2DQ Ch. 2 - Prob. 3DQ Ch. 2 - Prob. 4DQ Ch. 2 - How are assets and expenses related, and why are...Ch. 2 - Prob. 6DQ Ch. 2 - Prob. 7DQ Ch. 2 - Prob. 8DQ Ch. 2 - Tell whether each of the following accounts is an...Ch. 2 - Prob. 2SE

A company incurs a cost for a part that is needed to repair a piece of equipment. Is the cost an asset or an expense? Explain.

Concept explainers

Videos

Explanation of Solution

Want to see more full solutions like this?

Chapter 2 Solutions