A construction company purchased a piece of equipment with a price of $100,000 on March 1 of the current year. The amounts are related to the equipment purchase. Match the items and explain how each item should be accounted for. (Choices may be used more than once.)
-The company financed the equipment purchase with a bank loan. Interest of $3,000 was paid on the loan during the year.

Question

Quizplus · Accepted Answer

The interest paid on the loan is a revenue expenditure because it is a cost incurred during the normal operations of the business and not directly attributable to the acquisition of the equipment.

A Construction Company Purchased a Piece of Equipment with a Price