FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Revenue and Capital Expenditures
Shriver Company built an addition to its chemical plant. Indicate whether each of the following expenditures related to the addition is a revenue expenditure or a capital expenditure:
a. Shriver's initial application for a building permit was denied by the city as not conforming to environmental standards. Shriver disagreed with the decision and spent $8,000 in attorney's fees to convince the city to reverse its position and issue the permit.
Answer
b. Due to unanticipated sandy soil conditions, and on the advice of construction engineers, Shriver spent $58,000 to extend the footings for the addition to a greater depth than originally planned.
Answer
c. Shriver spent $3,000 to send each of the addition's subcontractors a side of beef as a thank-you gift for completing the project on schedule.
Answer
d. Shriver invited the mayor to a ribbon-cutting ceremony to open the plant addition. It spent $40 to purchase the ribbon and scissors.
Answer
e. Shriver spent $4,100 to have the company logo sandblasted into the concrete above the entrance to the addition.
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