Question

Indicate which of the following costs should be expensed when incurred.

(a)		$13,000 paid to rearrange and reinstall machinery.		select an option                                                          YesNo
(b)		$200,000 paid for addition to building.		select an option                                                          YesNo
(c)		$200 paid for tune-up and oil change on delivery truck.		select an option                                                          YesNo
(d)		$7,000 paid to replace a wooden floor with a concrete floor.		select an option                                                          YesNo
(e)		$2,000 paid for a major overhaul on a truck, which extends the useful life.

Answer 1

a	$13,000 paid to rearrange and reinstall machinery.	No
b	$200,000 paid for addition to building.	No
c	$200 paid for tune-up and oil change on delivery truck.	Yes
d	$7,000 paid to replace a wooden floor with a concrete floor.	No
e	$2,000 paid for a major overhaul on a truck, which extends the useful life.	No

Expenses which increase the efficiency, operating capacity or extend the useful life of asset should be capitalized.