State whether each of the below is Capital Expenditure or Revenue Expenditure. 1Purchase of new delivery vehicle 2Payment of an invoice for advertising 3Costs of clearing the site ready for anextension to the factory building 4Signwriting on the outside of the new delivery vehicles 5Redecoration of the office 6Payment of delivery driver’s wages 7Fuel for delivery vehicles 8Fitting of shelving in delivery vehicle 9Clay for making the pets toys 10Wages of sales staff 11Purchase of potters wheel for use in the business 12Installation costs for the potters wheel 13Wages os staff operating the potters wheel 14Redecoration of store room 15Payment of extra wages to own staff for fitting the alarm and cctv 16Payment of architect fees for designing the proposed new shop 17Purchase of new telephones system for the business

Name: State whether each of the below is Capital Expenditure or Revenue Expe
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Description: State whether each of the below is Capital Expenditure or Revenue Expenditure. 1Purchase of new delivery vehicle 2Payment of an invoice for advertising 3Costs of clearing the site ready for anextension to the factory building 4Signwriting on the out

Capital expenditure are those expenditure whose benefit or use is enjoyed for a longer period say…

Business

Accounting

Payment of an invoice for advertising 3 Costs of clearing the site ready for an extension to the factory building 4 Signwriting on the outside of the new delivery vehicles 5 Redecoration of the office 6 Payment of delivery driver’s wages

Payment of an invoice for advertising 3 Costs of clearing the site ready for an extension to the factory building 4 Signwriting on the outside of the new delivery vehicles 5 Redecoration of the office 6 Payment of delivery driver’s wages

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 42E

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(a) Explain clearly the difference between capital expenditure and revenue expenditure. (b) Classify the items listed below either as capital or revenue expenditure. Fittings partition in a new shop; Carriage on returns outwards; Cost of weighing machine in a retail shop; Repairs to office safe; Legal costs of collecting debts; Legal costs of building materials for a new office building; Carriage costs of building materials for a new office building; Purchase of an extra motor vehicle for distributor of soda and beer; Cost of paint for repainting the hospital wards from green to blue; Cost of paying for registration number plates of a new motor vehicle; Cost of replacing registration number plates of a motor vehicle;
(b) Classify the items listed below either as capital or revenue expenditure. Fittings partition in a new shop; Carriage on returns outwards; Cost of weighing machine in a retail shop; Repairs to office safe; Legal costs of collecting debts; Legal costs of building materials for a new office building; Carriage costs of building materials for a new office building; Purchase of an extra motor vehicle for distributor of soda and beer; Cost of paint for repainting the hospital wards from green to blue; Cost of paying for registration number plates of a new motor vehicle; Cost of replacing registration number plates of a motor vehicle;
For each of the following items, indicate if it is a Capital Expenditures (CE) or Revenue Expenditure (RE). 1. Constructed an addition to an existing building. 2. Repainted the president’s office. 3. Paid cash for improvements that will increase the number of products that the machine can produce per hour. 4. Replaced the tires on a company delivery vehicle. 5. Replaced a component of a machine that will increase the economic life of that machine.
Classify the items listed below either as capital or revenue expenditure. Fittings partition in a new shop; Carriage on returns outwards; Cost of weighing machine in a retail shop; Repairs to office safe; Legal costs of collecting debts; Legal costs of building materials for a new office building; Carriage costs of building materials for a new office building; Purchase of an extra motor vehicle for distributor of soda and beer; Cost of paint for repainting the hospital wards from green to blue; Cost of paying for registration number plates of a new motor vehicle; Cost of replacing registration number plates of a motor vehicle;
Which of the following items should be accounted for as a capital expenditure?a. The monthly rental cost of an office buildingb. Costs incurred to repair leaks in a building’s roofc. Maintenance fees paid with funds provided by the company’s capitald. Taxes paid in conjunction with the purchase of office equipment
Adama Company incurred the following costs.Indicate to which account Adama would debit each of the costs. 1. Sales tax on factory machinery purchased $ 5,000 Select the account to be debited Land ImprovementsLandPrepaid InsuranceBuildingEquipment 2. Painting of and lettering on truck immediately upon purchase 700 Select the account to be debited Prepaid InsuranceBuildingLand ImprovementsLandEquipment 3. Installation and testing of factory machinery 2,000 Select the account to be debited Prepaid InsuranceBuildingLandEquipmentLand Improvements 4. Real estate broker’s commission on land purchased 3,500 Select the account to be debited Prepaid InsuranceBuildingLandEquipmentLand Improvements 5. Insurance premium paid for first year’s insurance on new truck 880 Select the account to be debited EquipmentPrepaid InsuranceLand ImprovementsBuildingLand 6. Cost of landscaping on property purchased 7,200 Select the…
Capital & Revenue Expenditure Consider the following list of expenses incurred by a company: Purchase of a motor car Claim for a meal Purchase of shares in a supplier Purchase of a new computer Payment for hotel accommodation Installation cost for server Purchase of raw materials Repair of motor vehicles Purchase of new stationery Payment of an insurance premium Wages Purchase of a new plot of land. Required: Examine this list and determine if each expense is revenue or capital expenditure. You are required to provide a short explanation for your choice.
Identify the following costs that could be capitalized on the firm’s balance sheet (included in property, plant, and equipment). New windshield wiper blades on the company’s truck New sidewalks in front of the firm’s factory Freight expenses for new equipment installed in the factory Installation costs for the new equipment Realtor’s fees associated with land purchase Minor engine repair on the truck Engine replacement on the truck Razing or demolishing a building on newly acquired land Design costs for a new building Value-added tax Construction expenses associated with building a garage Costs required to bring the equipment to its intended location Administration and other general overhead costs Idle capacity Wasted materials, labour and other resources
Which of the following is considered capital expenditure Select one: a. Research expenses. b. Purchase of office consumables. c. Cost of material to construct new plant. d. Staff overtime.
The following expenditures relating to plant assets were made by Glenn Company during the first 2 months of 2014.(b) Indicate the account title to which each expenditure should be debited. 1. Paid $7,000 of accrued taxes at the time the plant site was acquired. choose an account title Land ImprovementsLandLicense ExpenseEquipmentPrepaid Insurance 2. Paid $200 insurance to cover a possible accident loss on new factory machinery while the machinery was in transit. choose an account title LandLand ImprovementsPrepaid InsuranceEquipmentLicense Expense 3. Paid $850 sales taxes on a new delivery truck. choose an account title LandLand ImprovementsPrepaid InsuranceLicense ExpenseEquipment 4. Paid $21,000 for parking lots and driveways on the new plant site. choose an account title EquipmentLicense ExpenseLand ImprovementsLandPrepaid Insurance 5. Paid $250 to have the company name and slogan painted on the new delivery truck. choose an…
Jax Construction Company plans to erect a new building. It will use part of the space for its own offices and lease the balance of the space to tenants. The company has two alternatives: (1) do its own construction work or (2) use an independent contractor. Cost estimates have been prepared to show the costs of operation for the coming year during which the new building will be constructed. The costs of constructing the building, if done by Jax, are included in that set of estimates. If the company does its own construction work, it will not be able to handle outside construction contracts that would contribute $500,000 to net income. The costs attributable to these outside contracts are excluded from the estimated costs of operation shown below. Estimated Costs toOperate –Construction byIndependentContractors Estimated Costs toOperate (includingConstruction) –Construction by Jax(self) Materials $6,000,000 $7,000,000 Labour 3,000,000 4,800,000 Indirect materials and…
For each of the following items, enter the correct letter to show whether the expenditure should becapitalized (C) or expensed (E).Transactions1. Purchased a machine, $70,000; gave long-term note.2. Paid $600 for ordinary repairs.3. Purchased a patent, $45,300 cash.4. Paid cash, $200,000, for addition to old building.5. Paid $20,000 for monthly salaries.6. Paid $250 for routine maintenance.7. Paid $16,000 for extraordinary repairs.

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1	Purchase of new delivery vehicle
2	Payment of an invoice for advertising
3	Costs of clearing the site ready for an extension to the factory building
4	Signwriting on the outside of the new delivery vehicles
5	Redecoration of the office
6	Payment of delivery driver’s wages
7	Fuel for delivery vehicles
8	Fitting of shelving in delivery vehicle
9	Clay for making the pets toys
10	Wages of sales staff
11	Purchase of potters wheel for use in the business
12	Installation costs for the potters wheel
13	Wages os staff operating the potters wheel
14	Redecoration of store room
15	Payment of extra wages to own staff for fitting the alarm and cctv
16	Payment of architect fees for designing the proposed new shop
17	Purchase of new telephones system for the business