Chapter 8, Problem 7DQ

To determine

Ordinary expenses:

Ordinary expenses are those expenses that are incurred to maintain an asset in a proper working condition. These expenses do not extend the useful life of that particular asset but it ensures the smooth functioning of it.

Extraordinary expenses: Extraordinary expenses are those expenses which are incurred with an intention to extend the useful life of an asset that make a plant more effective and efficient. It includes change of old parts to new parts of a plant asset resulting in smooth and efficient operations.

To identify: The difference between ordinary expenses and extraordinary expenses.