Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Textbook Question
Chapter 6, Problem 11SEA
Analyze revenue and capital expenditures. (LO 4). Categorize each of the following as a capital expenditure or a revenue expenditure (expensed) for Dalton & Sons and explain why:
- 1. In accordance with the long-term maintenance plan, paid for a newly reshingled roof (replacing similar old shingles)
- 2. Built an annex to the building for the executive offices
- 3. Improved the ventilation system to increase energy efficiency in the building
- 4. Replaced parts in major equipment as needed
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Students have asked these similar questions
(b) Classify the items listed below either as capital or revenue expenditure.
Fittings partition in a new shop;
Carriage on returns outwards;
Cost of weighing machine in a retail shop;
Repairs to office safe;
Legal costs of collecting debts;
Legal costs of building materials for a new office building;
Carriage costs of building materials for a new office building;
Purchase of an extra motor vehicle for distributor of soda and beer;
Cost of paint for repainting the hospital wards from green to blue;
Cost of paying for registration number plates of a new motor vehicle;
Cost of replacing registration number plates of a motor vehicle;
For each of the following items, indicate if it is a Capital Expenditures (CE) or Revenue Expenditure (RE).
1.
Constructed an addition to an existing building.
2.
Repainted the president’s office.
3.
Paid cash for improvements that will increase the number of products that the machine can produce per hour.
4.
Replaced the tires on a company delivery vehicle.
5.
Replaced a component of a machine that will increase the economic life of that machine.
Indigo Architecture made the following cash expenditures during its first year in operations:
1.
2.
3.
4.
5.
6.
7.
8.
9.
(a1)
Cost of real estate purchased as a plant site (land and building)
Accrued property taxes paid at the time of the purchase of the real estate
Cost of demolishing building to make land suitable for construction of a new building
Architect's fees on building plans
Excavation costs for new building
Cost of filling and grading the land
Full payment to building contractor
Cost of parking lots and driveways
Property taxes paid for the current year on the land
Your answer is partially correct.
$133,900
3,300
10,600
14,700
26,900
2.300
752,600
32,800
8,200
Record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.
List all debit entries before credit entries.)
Chapter 6 Solutions
Financial Accounting
Ch. 6 - For each of the following costs, indicate whether...Ch. 6 - Prob. 2YTCh. 6 - For each of the following, give the term for...Ch. 6 - On January 1, 2010, Access Company purchased a new...Ch. 6 - Prob. 5YTCh. 6 - An asset costs 50,000, has an estimated salvage...Ch. 6 - Prob. 7YTCh. 6 - Prob. 8YTCh. 6 - Prob. 1QCh. 6 - What is the difference between capitalizing and...
Ch. 6 - Prob. 3QCh. 6 - What does amortization mean?Ch. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - What is the residual value, or salvage value, of...Ch. 6 - What is the difference between depreciation...Ch. 6 - Prob. 11QCh. 6 - Explain the difference between the three...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - What types of costs related to long-term...Ch. 6 - How is a gain or loss on the disposal of an asset...Ch. 6 - How does goodwill arise?Ch. 6 - Prob. 19QCh. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 1MCQCh. 6 - Prob. 2MCQCh. 6 - Prob. 3MCQCh. 6 - Prob. 4MCQCh. 6 - Prob. 5MCQCh. 6 - Prob. 6MCQCh. 6 - Prob. 7MCQCh. 6 - Prob. 8MCQCh. 6 - Prob. 9MCQCh. 6 - Prob. 10MCQCh. 6 - Prob. 1SEACh. 6 - Prob. 2SEACh. 6 - Prob. 3SEACh. 6 - Prob. 4SEACh. 6 - Prob. 5SEACh. 6 - Calculate depreciation expense: double-declining...Ch. 6 - Prob. 7SEACh. 6 - Prob. 8SEACh. 6 - Mining Expedition Company purchased a coal mine on...Ch. 6 - Unique Quality Recourses purchased a patent for...Ch. 6 - Analyze revenue and capital expenditures. (LO 4)....Ch. 6 - On January 1, 2010, the Premium Beer Corporation...Ch. 6 - Prob. 13SEACh. 6 - Prob. 14SEACh. 6 - Prob. 15SEBCh. 6 - Prob. 16SEBCh. 6 - Prob. 17SEBCh. 6 - Prob. 18SEBCh. 6 - Prob. 19SEBCh. 6 - Calculate depreciation expense: double-declining...Ch. 6 - Prob. 21SEBCh. 6 - Prob. 22SEBCh. 6 - Prob. 23SEBCh. 6 - Prob. 24SEBCh. 6 - Prob. 25SEBCh. 6 - Prob. 26SEBCh. 6 - Prob. 27SEBCh. 6 - Prob. 28SEBCh. 6 - Prob. 29EACh. 6 - Prob. 30EACh. 6 - Prob. 31EACh. 6 - Prob. 32EACh. 6 - Calculate depreciation under alternative methods....Ch. 6 - Soda Pop Bottling Company bought equipment for...Ch. 6 - Prob. 35EACh. 6 - Prob. 36EACh. 6 - Prob. 37EACh. 6 - Prob. 38EACh. 6 - Prob. 39EACh. 6 - Prob. 40EACh. 6 - Prob. 41EACh. 6 - Prob. 42EACh. 6 - Prob. 43EACh. 6 - Prob. 44EACh. 6 - Prob. 45EACh. 6 - Big Peach Athletics sold assets with an original...Ch. 6 - Prob. 47EACh. 6 - Prob. 48EACh. 6 - Prob. 49EBCh. 6 - Prob. 50EBCh. 6 - Prob. 51EBCh. 6 - Prob. 52EBCh. 6 - Calculate depreciation under alternative methods....Ch. 6 - Pristine Carpet Cleaner bought a new steamer for...Ch. 6 - Prob. 55EBCh. 6 - Prob. 56EBCh. 6 - Prob. 57EBCh. 6 - Prob. 58EBCh. 6 - Prob. 59EBCh. 6 - Prob. 60EBCh. 6 - Prob. 61EBCh. 6 - Prob. 62EBCh. 6 - Prob. 63EBCh. 6 - Prob. 64EBCh. 6 - Prob. 65EBCh. 6 - Prob. 66EBCh. 6 - Prob. 67EBCh. 6 - Prob. 68EBCh. 6 - Prob. 69PACh. 6 - Prob. 70PACh. 6 - Prob. 71PACh. 6 - Prob. 72PACh. 6 - Prob. 73PACh. 6 - Prob. 74PACh. 6 - Prob. 75PACh. 6 - Prob. 76PACh. 6 - Prob. 77PACh. 6 - Prob. 78PACh. 6 - Prob. 79PBCh. 6 - Prob. 80PBCh. 6 - Prob. 81PBCh. 6 - Prob. 82PBCh. 6 - Prob. 83PBCh. 6 - Prob. 84PBCh. 6 - Prob. 85PBCh. 6 - Elite Cleaners bought a new machine on January 1,...Ch. 6 - Prob. 87PBCh. 6 - Prob. 88PBCh. 6 - Prob. 1FSACh. 6 - Prob. 2FSACh. 6 - Prob. 1CTPCh. 6 - Prob. 2CTPCh. 6 - Prob. 3CTPCh. 6 - Prob. 1IECh. 6 - Prob. 2IECh. 6 - Prob. 3IE
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- (a) Explain clearly the difference between capital expenditure and revenue expenditure. (b) Classify the items listed below either as capital or revenue expenditure. Fittings partition in a new shop; Carriage on returns outwards; Cost of weighing machine in a retail shop; Repairs to office safe; Legal costs of collecting debts; Legal costs of building materials for a new office building; Carriage costs of building materials for a new office building; Purchase of an extra motor vehicle for distributor of soda and beer; Cost of paint for repainting the hospital wards from green to blue; Cost of paying for registration number plates of a new motor vehicle; Cost of replacing registration number plates of a motor vehicle;arrow_forwardIdentify the following expenditures as capital expenditures or revenue expenditures:a. Immediately after acquiring a new delivery truck, paid $195 to have the name of the store andother 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 someyears 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 deprecia-tion of 25 percent yearly had been recognized. After three years’ use, however, it was decided to recondition the truck thoroughly, including adding a new engine.arrow_forwardC & M Securities made several expenditures during the current fiscal year, including the following:(a)For each of the items listed below, indicate whether the cost should be debited to land, buildings, equipment, land improvements, or an expense account. Amount Description of Expenditure 1. $150,000 Acquisition of a piece of land to be used as a building site No effectEquipmentBuildingExpense or Land improvementsLandExpenseExpense or BuildingsLand improvements 2. 3,000 Demolition of a small building on the land, to make way for the new building Expense or BuildingsNo effectLand improvementsBuildingExpenseEquipmentLandExpense or Land improvements 3. 7,500 Levelling of the land to prepare it for construction of the new building No effectLand improvementsExpense or Land…arrow_forward
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