Cr Which of the following purchases would be considered capital investments? Pur

Question

Cr Which of the following purchases would be considered capital investments? Purchase item Capital investment? a. Land for the new administrative offices will cost $250,000 b. Salary costs for the upcoming year are projected to be $2,000,000 c. The cost of electricity and other utilities for the manufacturing facility is approximately $575,000 per year. d. The construction and installation of special-use machinery to produce a new model of washer is projected to cost $450,000 e. The new advertising campaign for the first quarter of the upcoming year will cost $175,000. f. Twelve new cars are purchased for a total of $300,000 to expand the fleet of cars used by the salespeople. g. New self-scan registers are purchased for all store locations at a total cost of $700,000. h. A new network system throughout corporate headquarters will be installed for a cost of $200,000 i. The cost of paper and toner for the company printers is projected to be $150,000 for the upcoming year i. The purchase cost plus installation for a second extrusion machine in a plastics recycling firm will be $500.000 Click to select your answer(s).

Explanation / Answer

A capital expenditure is an expenditure which increases the utility to a business for more than one year.

Purchase Item

Capital Investment ( Yes , NO)

Capital Investment , Yes

Capital Investment ,No

Capital Investment , Yes

Capital Investment , Yes

Capital Investment ,No

Capital Investment ,No

Capital Investment ,No

Capital Investment , Yes

Capital Investment ,No

Capital Investment , Yes

Purchase Item

Capital Investment ( Yes , NO)

1. Land for the new administrative offices will cost $250,000

Capital Investment , Yes

1. Salary costs for the upcoming year are projected to be $2,000,000

Capital Investment ,No

1. The cost of electricity and other utilities for the manufacturing facility is approximately $575,000 per year

Capital Investment , Yes

1. The construction and installation of special use machinery to produce a new model of washer is projected to cost $450,000

Capital Investment , Yes

1. The new advertising campaign for the first quarter of the upcoming year will cost $175,000

Capital Investment ,No

1. Twelve new cars are purchased for a total of $300,000 to expand the fleet of cars used by the salespeople.

Capital Investment ,No

1. New self –scan registers are purchased for all store locations at a total cost of $700,000

Capital Investment ,No

1. A new network system throughout corporate headquarters will be installed for a cost of $200,000

Capital Investment , Yes

1. The cost of paper and toner for the company printers is projected to be $150,000 for the upcoming year.

Capital Investment ,No

1. The purchase cost plus installation for a second extrusion machine in a plastics recycling firm will be $500,000

Capital Investment , Yes

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