For each of the following items, indicate whether the costs should be capitalized or expensed immediately.
1. Purchased a patent for $16,000.
2. Paid $7,500 to overhaul a drilling rig. The overhaul will extend the useful life by 3 years.
3. Paid $800 for routine maintenance and lubrication of a tractor.
4. Paid $9,500 to install new equipment in the production line that will "super-cool" the product and allow for faster shipping of fresher merchandise.

Question

For each of the following items, indicate whether the costs should be capitalized or expensed immediately.
1. Purchased a patent for $16,000.
2. Paid $7,500 to overhaul a drilling rig. The overhaul will extend the useful life by 3 years.
3. Paid $800 for routine maintenance and lubrication of a tractor. 
4. Paid $9,500 to install new equipment in the production line that will "super-cool" the product and allow for faster shipping of fresher merchandise.

Quizplus · Accepted Answer

The Answer of For each of the following items, indicate whether the costs should be capitalized or expensed immediately.
1. Purchased a patent for $16,000.
2. Paid $7,500 to overhaul a drilling rig. The overhaul will extend the useful life by 3 years.
3. Paid $800 for routine maintenance and lubrication of a tractor. 
4. Paid $9,500 to install new equipment in the production line that will "super-cool" the product and allow for faster shipping of fresher merchandise.

For Each of the Following Items, Indicate Whether the Costs