In Year 1,Fisher Apartments purchased an apartment building to rent to university students.It cost the company $250 to fix damage done by a tenant to one of its units.How should this cost be treated?

Question

Quizplus · Accepted Answer

The cost of repairing the damage done by a tenant should be recorded as a repair maintenance expense, as it is a normal and necessary cost of maintaining the apartment building for rental purposes. It is not considered a part of the asset account because it does not enhance or extend the useful life of the asset, but rather it is a cost of normal wear and tear. It should be expensed in the period it was incurred. Therefore, options A, C, and D are not correct.

In Year 1,Fisher Apartments Purchased an Apartment Building to Rent