Question: Ayr Ltd is a small manufacturing company located near Montreal

Ayr Ltd. is a small manufacturing company located near Montreal. The company recently purchased a new machine to satisfy the increasing demand for its products. For each of the following, explain whether the expenditure would be capitalized or expensed:
a. The equipment cost $100,000, plus $14,975 in HST and $50,000 was paid in cash with the remainder due in 30 days.
b. To fit the machine into the existing shop space it was necessary to reorganize the layout of existing equipment. The reorganization cost $12,500.
c. It was necessary to knock down a wall to get the machine into place. The work cost $6,700.
d. During the installation mistakes by workers damaged the electrical system in the shop. Repairs cost $8,000.

View Solution:

Sale on SolutionInn
  • CreatedFebruary 26, 2015
  • Files Included
Post your question