Jackie Fox owns and operates Platinum Transport Co. During the past year, Jackie incurred the following costs related to an 18-wheel truck:1. Changed engine oil.2. Installed a television in the sleeping compartment of the truck.3. Installed a wind deflector on top of the cab to increase fuel mileage.4. Modified the factory-installed turbo charger with a special-order kit designed to add 50 more horsepower to the engine performance.5. Replaced a headlight that had burned out.6. Replaced a shock absorber that had worn out.7. Replaced fog and cab light bulbs.8. Replaced the hydraulic brake system that had begun to fail during his latest trip through the Rocky Mountains.9. Removed the old radio and replaced it with a new communications module.10. Replaced the old radar detector with a newer model that is fastened to the truck with a locking device that prevents its removal.Classify each of the costs as a capital expenditure or a revenue expenditure.

Question
Asked Dec 17, 2019
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Jackie Fox owns and operates Platinum Transport Co. During the past year, Jackie incurred the following costs related to an 18-wheel truck:
1. Changed engine oil.
2. Installed a television in the sleeping compartment of the truck.
3. Installed a wind deflector on top of the cab to increase fuel mileage.
4. Modified the factory-installed turbo charger with a special-order kit designed to add 50 more horsepower to the engine performance.
5. Replaced a headlight that had burned out.
6. Replaced a shock absorber that had worn out.
7. Replaced fog and cab light bulbs.
8. Replaced the hydraulic brake system that had begun to fail during his latest trip through the Rocky Mountains.
9. Removed the old radio and replaced it with a new communications module.
10. Replaced the old radar detector with a newer model that is fastened to the truck with a locking device that prevents its removal.
Classify each of the costs as a capital expenditure or a revenue expenditure.

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Expert Answer

Step 1

Capital expenditure: It refers to the amount spent on acquiring, maintaining and improving the fixed assets that increases its productivity or extends the useful life. It provides benefits in the future period.

Revenue ex...

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