..ooo T-Mobile 10:16 AM 100% applebees-expensed-versus-c... eadlines What costs

Question

..ooo T-Mobile 10:16 AM 100% applebees-expensed-versus-c... eadlines What costs will be expensed versus capitalized in Applebee' s investment in tableside tablets for its restaurants? At Applebee's, Presto tablets by E la Cate are being installed at every table. In total, Applebee's will be purchasing 100,000 tablets. Customers will be able to pay their food bill and order appetizers and desserts using the tablets In addition to the initial purchase price of the tablet hardware and various other costs, Appiebee's will be paying E la Carte a subscription fee for the use and upkeep of the tablets Data and assumptions Use the following assumptions for data for this exercise (all figures are assumptions only): Each tablet has an initial purchase price of $250 2. The ansual subscription fee per tablet is $50 3. The cost to run wiring to all tables for the tablet is $4,000,ooo 4. The cost of brackets to attach the tablets to the tables is $3.400,000 5 Initial training of staff on the use of the tablets $s.000,00o 6. Additional annual T costs incurred for tablet maintenance and updates is $225,000 7- The useful life of the tablets is four years. Ignore depreciation and taxes. Which of Applebee's expenditures foe the tablets will be expensed? Which will be capitalined? This wark i censed under a Courses Calendar Todo Notifications Messages

Explanation / Answer

Tablet Cost            1000,000*250 250000000 Add Installation Cost 4000000            Cost of brackets 3400000 Total expense to be capitalized 257400000 As the nature of the investment by way of tranning is in staff rather then fixed assets directly, such expenditure should always be treated as a revenue expense Revenue expenditure Annual Subscribtion fees 50*1000000 50000000 Intial Trainning expense 5000000 Additional Annual IT cost 2250000 Total Revenue Expenditure 57250000

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