Capitalizing versus expensing For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers. a. $30,000 annual cost of routine repair and maintenance expenditures for a fleet of delivery vehicles. b. $12,000,000 cost to develop a coal mine, from which an estimated 1 million tons of coal can be extracted. c. $248,000 cost to replace the roof on a building. d. $140,000 cost of a radio and television advertising campaign to introduce a new product line. e. $8,000 cost of grading and leveling land so that a building can be constructed.

a) an expense b) a capitalized cost c) a capitalized cost d) an expense e) a capitalized cost.

Explanation:

The question is to determine how the following transactions should be recorded based on capitalizing or expensing

a) $30,000 annual cost of repair and maintenance expenditures represents an expense, this is because it is not a cost associated to the usefulness or the estimated life use of the delivery vehicles, as such these cost cannot be capitalized

b) The $12,000,000 to develop a coal mine represents the initial cost of acquiring the asset (the coal mine). Usually, the cost of an asset is usually the cost of acquisition plus the set-up cost. From this coal mine revenue will be generated, hence this is a capitalized cost.

c) $248,000 roof replacement cost, this is capitalized and recorded as an asset cost because it will extend the useful life of the building which is an asset.

d) $140,000 cost of advertising campaign for a new product line should be recorded as an expense this is because it is part of advertising cost which is usually treated as expenses in the statement of income

e)$8,000 cost of grading and leveling land to construct a building will be treated as a capitalized cost because is part of the costs of getting the land (an asset) ready for its future use of erecting a building

typically a loft will include modern kitchen and bathrooms, this increases the price tag. lofts also have a good amount of open space, this requires more heating and electricity. lofts are also in older buildings, this means that maintaining the location increases the bill. keep in mind this is without talking about the high state and property taxes.

i hope this you! : )

answerthe above statement is false;