Varamax Pty Ltd.purchased manufacturing equipment with an expected useful life of five years.The purchase of the machinery would be shown as [blank].

Question

Quizplus · Accepted Answer

The purchase of manufacturing equipment is a long-term investment and therefore should be recorded as an asset on the balance sheet. It is not an expense that should be recorded on the income statement. Over time, the cost of the equipment will be expensed through depreciation on the income statement, but the initial purchase is recorded as an asset on the balance sheet.