Cameron Industries is purchasing a new chemical vapour depositor in order to make silicon chips.It will cost $6 million to buy the machine and $10,000 to have it delivered and installed.Building a clean room in the plant for the machine will cost an additional $3 million.The machine is expected to have a working life of six years.Which of these activities will be reported as an operating expense?

Question

Quizplus · Accepted Answer

The redesign of the plant, which involves building a clean room, is considered an operating expense because it is necessary for the machine's operation but does not directly contribute to the asset's acquisition cost.

Cameron Industries Is Purchasing a New Chemical Vapour Depositor in Order