Indicate in the blank spaces below, the section of the balance sheet where the t
ID: 2437883 • Letter: I
Question
Indicate in the blank spaces below, the section of the balance sheet where the toll items are reported. Use the following code to identify your answer: owing Property, Plant, and Equipment Intangibles Other Not on the balance sheet PPE N/A 6. Goodwill 7. Land Improvements 8. Buildings 9. Accumulated Depreciation 10. Trademarks 11. R and D Costs Identify the following expenditures as capital expenditures (C) or expenses (E) 12. Replacement of worn out gears on factory machinery Construction of a new wing on an office building. Oil change on a company truck Overhaul of a truck motor. One year extension in useful life is expected. Purchased a wastebasket at a cost of $10. 15. 16.Explanation / Answer
I
6
Goodwill
PPE
7
Land Improvement
PPE
8
Buildings
PPE
9
Accumulated Depreciation
I
10
Trademarks
N/A
11
R and D cost
Goodwill and trademark are intangible assets. Land Improvement, Buildings, Accumulated Depreciation are reported under property plant and equipment section of balance sheet. Whereas R and D cost is an operating expense and is recorded on income statement.
12
C
Replacement of worn out gears on factory machinery
13
C
Construction of new wing on a factory building
14
E
Oil change on a company truck
15
E
Overhaul of a truck motor. One year extension in useful life is expected
16
E
Purchase of a wastebasket at a cost of $ 10.
Capital expenditure is the fund used to acquire or maintain fixed asset like land, building and assets. Hence options 12 & 13 are Capital expenditure.
Expense is the cost experienced as a part of a company’s operating activity during a particular accounting period. So options 14, 15, 16 all are expenses.
I
6
Goodwill
PPE
7
Land Improvement
PPE
8
Buildings
PPE
9
Accumulated Depreciation
I
10
Trademarks
N/A
11
R and D cost