US Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service: 1. Installed GPS systems on the trucks. 2. Replaced the transmission fluid on a truck that had been in service for the past four years. 3. Overhauled the engine on one of the trucks purchased three years ago. 4. Performed annual service of installing new spark plugs, changing the oil, and greasing the joints of all trucks and vans. 5. Rebuilt the engine on one of the vans that had been driven 80,000 miles. 6. Repaired a flat tire on one of the vans. 7. Installed a hydraulic lift to a truck. 8. Tinted the back and side windows of the vans and installed a security system to discourage theft of contents. 9. Replaced a truck’s suspension system with a new suspension system, allowing for heavier loads. 10. Installed an optional third-row seat on one of the vans. Classify each of the costs as a capital expenditure or a revenue expenditure.

BuyFind

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
BuyFind

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

Solutions

Chapter 10, Problem 13E
Textbook Problem

US Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service:

  1. 1. Installed GPS systems on the trucks.
  2. 2. Replaced the transmission fluid on a truck that had been in service for the past four years.
  3. 3. Overhauled the engine on one of the trucks purchased three years ago.
  4. 4. Performed annual service of installing new spark plugs, changing the oil, and greasing the joints of all trucks and vans.
  5. 5. Rebuilt the engine on one of the vans that had been driven 80,000 miles.
  6. 6. Repaired a flat tire on one of the vans.
  7. 7. Installed a hydraulic lift to a truck.
  8. 8. Tinted the back and side windows of the vans and installed a security system to discourage theft of contents.
  9. 9. Replaced a truck’s suspension system with a new suspension system, allowing for heavier loads.
  10. 10. Installed an optional third-row seat on one of the vans.

Classify each of the costs as a capital expenditure or a revenue expenditure.

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Chapter 10 Solutions

Financial Accounting
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