Which of the following costs related to the purchase of production equipment incurred by Lincoln Company during 2011 would be considered a revenue expenditure?

Question

Quizplus · Accepted Answer

Repair and maintenance costs during the equipment's first year of service are considered revenue expenditures because they do not result in a substantial increase in the productivity or useful life of the equipment. They are necessary expenses to keep the equipment in proper working condition and maintain its current level of productivity. The other costs listed such as installation costs, purchase price less cash discount, and transportation charges are considered capital expenditures because they result in a substantial increase in the productivity or useful life of the equipment.

Which of the Following Costs Related to the Purchase of Production