1. Identify the type of costs as either a capital or revenue expenditure for the
ID: 2457045 • Letter: 1
Question
1. Identify the type of costs as either a capital or revenue expenditure for the Martinez Company.
Martinez Company purchased a machine on January 1, 2014. In addition to the purchase price paid, the following additional costs were incurred.
Which costs listed below are capital expenditures? Select all that apply. (Points : 5) sales tax paid on the purchase price
transportation and insurance costs while the machinery was in transit from the seller
annual city operating license
personnel training costs for initial operation of the machinery
lubrication of the machinery gearing after the machinery was placed into
installation costs necessary to secure the machinery to the building flooring
lubrication of the machinery gearing before the machinery was placed into service
lubrication of the machinery gearing after the machinery was placed into service
annual city operating license
major overhaul to extend the life of the machinery
Martinez Company purchased a machine on January 1, 2014. In addition to the purchase price paid, the following additional costs were incurred.
Which costs listed below are revenue expenditures? Select all that apply. (Points : 5)
Explanation / Answer
Capital Expenditure-All expenses related to the asset in putting the asset to the present location and condition are to be capitalised.
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Sales tax paid on the purchase price is a capital expenditure since it is a part of the purchase price.
Transport and insurance paid while the asset in transit
Revenue expenditure
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lubrication of the machinery gearing after the machinery was placed into service
annual city operating licence
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