The purchase of a new cooling system for $150,000 to upgrade an office building owned by the company would be accounted for as:

Question

Quizplus · Accepted Answer

The purchase of a new cooling system for $150,000 would be considered as a capital expenditure, which means it is a long-term investment that will benefit the company for several years. As a result, it should be accounted for as an addition to the Buildings account, which is a long-term asset account. The expense will be depreciated over time, and the depreciation expense will be recorded as an expense in the period incurred. Therefore, option B is the correct choice.

The Purchase of a New Cooling System for $150,000 to Upgrade