Explanation Capitalized costs: Capitalized costs are considered as the part of fixed assets instead of stating them as expenses during the period in which they are incurred and capitalized costs are identified over a period of time through amortization or depreciation of fixed asset. Expense: Expenses are those which are incurred for the purpose of generating revenues from the main business activities during the current year. Particulars Capitalized or Expensed costs 1. Purchased a patent, $4,300 cash. Purchased a machine, $70,000; gave long-term note. C The capitalized costs are recorded as part of the cost of the asset while financing or constructing fixed assets and they are identified in future period of time. 2. Paid $10,000 for monthly salaries E This item is recorded as an expense, as it increases the revenue of the company in the current accounting period through business activities. 3. Paid cash dividends, $20,000 N Payment of cash dividend is neither capitalized cost, as it will be recorded as the part of the cost of the asset, nor expense, as it will not increase the revenue of the company in the current accounting period. 4. Purchased a machine, $7,000; gave a long-term note C The capitalized costs are recorded as part of the cost of the asset while financing or constructing fixed assets and they are identified in future period of time...

8th Edition

ISBN: 9780078025556

Author: Robert Libby, Patricia Libby, Daniel Short

Publisher: McGraw-Hill Education

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Chapter 8, Problem 3ME

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Chapter 8 Solutions

Financial Accounting, 8th Edition

Ch. 8 - Define long-lived assets. Why are they considered...Ch. 8 - Prob. 2Q Ch. 8 - What are the classifications of long-lived assets?...Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - In computing depreciation, three values must be...Ch. 8 - The estimated useful life and residual value of a...Ch. 8 - Prob. 10Q

Ch. 8 - Prob. 11Q Ch. 8 - Prob. 12Q Ch. 8 - Prob. 13Q Ch. 8 - Prob. 14Q Ch. 8 - Prob. 15Q Ch. 8 - Why is depreciation expense added to net income...Ch. 8 - Prob. 1MCQ Ch. 8 - Prob. 2MCQ Ch. 8 - Prob. 3MCQ Ch. 8 - Prob. 4MCQ Ch. 8 - Prob. 5MCQ Ch. 8 - Prob. 6MCQ Ch. 8 - Prob. 7MCQ Ch. 8 - Prob. 8MCQ Ch. 8 - Prob. 9MCQ Ch. 8 - (Chapter Supplement) Irish Industries purchased a...Ch. 8 - Prob. 1ME Ch. 8 - Prob. 2ME Ch. 8 - Prob. 3ME Ch. 8 - Prob. 4ME Ch. 8 - Computing Book Value (Double-Declining-Balance...Ch. 8 - Computing Book Value (Units-of-Production...Ch. 8 - Identifying Asset Impairment LO8-4 For each of the...Ch. 8 - Prob. 8ME Ch. 8 - Prob. 9ME Ch. 8 - Prob. 10ME Ch. 8 - Prob. 1E Ch. 8 - Prob. 2E Ch. 8 - Computing and Recording Cost and Depreciation of...Ch. 8 - Prob. 4E Ch. 8 - Prob. 5E Ch. 8 - Prob. 6E Ch. 8 - Prob. 7E Ch. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Prob. 9E Ch. 8 - Prob. 10E Ch. 8 - Computing Depreciation and Book Value for Two...Ch. 8 - Prob. 12E Ch. 8 - Prob. 13E Ch. 8 - Prob. 14E Ch. 8 - Prob. 15E Ch. 8 - Prob. 16E Ch. 8 - Prob. 17E Ch. 8 - Prob. 18E Ch. 8 - Prob. 19E Ch. 8 - Prob. 20E Ch. 8 - Prob. 21E Ch. 8 - Prob. 22E Ch. 8 - Prob. 23E Ch. 8 - Prob. 1P Ch. 8 - Prob. 2P Ch. 8 - Prob. 3P Ch. 8 - Prob. 4P Ch. 8 - Evaluating the Effect of Alternative Depreciation...Ch. 8 - Prob. 6P Ch. 8 - Prob. 7P Ch. 8 - Prob. 8P Ch. 8 - Prob. 9P Ch. 8 - Prob. 10P Ch. 8 - Prob. 11P Ch. 8 - Prob. 1AP Ch. 8 - Prob. 2AP Ch. 8 - Computing the Acquisition Cost and Recording...Ch. 8 - Prob. 4AP Ch. 8 - Prob. 5AP Ch. 8 - Prob. 6AP Ch. 8 - Prob. 7AP Ch. 8 - Prob. 1ACOMP Ch. 8 - Prob. 1BCOMP Ch. 8 - Prob. 1CCOMP Ch. 8 - Prob. 1DCOMP Ch. 8 - Prob. 1ECOMP Ch. 8 - Prob. 1CP Ch. 8 - Prob. 2CP Ch. 8 - Prob. 3CP Ch. 8 - Prob. 4CP Ch. 8 - Prob. 5CP Ch. 8 - Prob. 6CP Ch. 8 - Prob. 7CP Ch. 8 - Prob. 9CP Ch. 8 - Prob. 1CC

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Chapter 8 Solutions