ezto.mheducation.com Amr Hafez Principles of Accounting I-Spring 2018: Section 0

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ezto.mheducation.com Amr Hafez Principles of Accounting I-Spring 2018: Section 03 ACCOUNTING Chapter 7 Assignment instructions I help Question 6 (of 6) D Save&Ext; Submit 10.00 points You did not recelve full credit for this question in a previous attempt Several years ago, Health Services acquired a helicopter for use in emergency situations. Required Select whether Health Services should capitalize or expense each of the following expenditures related to the helicopter delivery operations in the current year: Overhauled the engine at a cost of $7,500. Health Services estimated the work wculd increase the service life for an additional five Cleaned, repacked, and sealed the bearings on the helicopter at a cost of $800. This repair is performed annually. Added new emergency health equipment to the helicopter for $25,000 Modified the helicopter to reduce cabin noise by installing new sound barrien Capitalize Expense Capitalize Capitalize Capitalize 3. at a cost of $15,000 Paid insurance on the helicopter for the current year, which increased 15% over e prior year to $9,000 6. Performed annual maintenance and repairs at a cost of $39,000 xpense References eBook & Resources Matching Difficulty: 3 Hard Learning Objective: 07-03 Describe the accounting treatment of expenditures acquisition.

Explanation / Answer

An expenditure is capitalized as an asset only if it brings economic benefits to future periods.If however, the expenditure benefits only the current period, it should be treated as an expense.

1. Capitalize 2. Expense 3. Capitalize 4. Capitalize 5. Expense 6. Expense

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