Your supervisor has come to you with the following list of expenditures for the

Question

Your supervisor has come to you with the following list of expenditures for the year and is asking you whether they should be capitalized or expensed as repairs and maintenance. Indicate all of the expenditures that would most appropriately be capitalized.

1.Repainted the office building.

2.Added a new wing onto the office building.

3.Took their fleet of cars in for servicing (changing the oil, etc.).

4.Added newer electronic locks on the doors in the production building.

5.Had an engine rebuilt in one of their fleet cars.

Explanation / Answer

1. Repainted the ofiice building: to be expensed as repairs and maintenance

2. Added a new wing onto the office building: To be capitalized.

3.Took their fleet of cars in for servicing: To be expensed as repairs and maintenance.

4. Added newer electronic locks on the doors in the production building: To be expensed as repairs and maintenance.

5. Had an engine rebuilt on one of their fleet cars: To be capitalized.

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