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Identify the Following Expenditures as Capital Expenditures or Operating Expenditures

Question 205

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Identify the following expenditures as capital expenditures or operating expenditures.

Premises:

Responses:

Overhaul of a truck motor. One year extension in useful life is expected

capital expenditures

Painting and lettering of a used truck upon acquisition of the truck

operating expenditures.

Oil change on a company truck

Replacing a network server's hard drive, this increases data storage capacity by ten times. No extension of useful life expected

Purchased a wastebasket, with an expected useful life of five years, at a cost of $10

Construction of a new wing on an office building

Replacement of worn out gears on factory machinery

Painting the exterior of a building

Premises:

Overhaul of a truck motor. One year extension in useful life is expected

Painting and lettering of a used truck upon acquisition of the truck

Oil change on a company truck

Replacing a network server's hard drive, this increases data storage capacity by ten times. No extension of useful life expected

Purchased a wastebasket, with an expected useful life of five years, at a cost of $10

Construction of a new wing on an office building

Replacement of worn out gears on factory machinery

Painting the exterior of a building

Responses:

capital expenditures

operating expenditures.

Correct Answer:

Premises:

Responses:

Overhaul of a truck motor. One year extension in useful life is expected

Painting and lettering of a used truck upon acquisition of the truck

Oil change on a company truck

Replacing a network server's hard drive, this increases data storage capacity by ten times. No extension of useful life expected

Purchased a wastebasket, with an expected useful life of five years, at a cost of $10

Construction of a new wing on an office building

Replacement of worn out gears on factory machinery

Painting the exterior of a building

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