Cameron Industries is purchasing a new chemical vapor 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 (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 acquisition cost of the machine itself.

Cameron Industries Is Purchasing a New Chemical Vapor Depositor in Order