Distinguishing Capital Expenditures from Revenue Expenditures Identify the follo
ID: 3886490 • Letter: D
Question
Distinguishing Capital Expenditures from Revenue Expenditures
Identify the following expenditures as capital expenditures or revenue expenditures:
a. Immediately after acquiring a new delivery truck, paid $260 to have the name of the store and other advertising material painted on the vehicle.
b. Painted delivery truck at a cost of $450 after two years of use.
c. Purchased new battery at a cost of $40 for two-year-old delivery truck.
d. Installed an escalator at a cost of $17,500 in a three-story building that had been used for some years without elevators or escalators.
e. Purchased a pencil sharpener at a cost of $15.00.
f. Original life of the delivery truck had been estimated at four years, and straight-line depreciation of 25 percent yearly had been recognized. After three years’ use, however, it was decided to recondition the truck thoroughly, including replacing the engine.
Explanation / Answer
Answer:-
a) capital expenditure
b) revenue expenditure
c) revenue expenditure
d) capital expenditure
e) revenue expenditure