You purchase a pizza oven that is expected to last 10 years for $15,000. How do you account for the economic cost of the oven?
A)Expense the oven, taking a write-off for the entire price in the first year.
B)Amortize the cost over the 10-year life of the oven, resulting in a cost of $1,500 per year.
C)Calculate the value of renting the oven to someone else and use that as your cost.
D)The cost is the price of the oven minus any revenue made selling pizzas made in the oven.

Question

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The Answer of You purchase a pizza oven that is expected to last 10 years for $15,000. How do you account for the economic cost of the oven?
A)Expense the oven, taking a write-off for the entire price in the first year.
B)Amortize the cost over the 10-year life of the oven, resulting in a cost of $1,500 per year.
C)Calculate the value of renting the oven to someone else and use that as your cost.
D)The cost is the price of the oven minus any revenue made selling pizzas made in the oven.

You Purchase a Pizza Oven That Is Expected to Last