Question

The following expenditures were incurred during the year:
a. Paid $4,000 for an overhaul of an automobile engine.
b. Paid $20,000 to add capacity to a cellular phone company’s wireless network.
c. Paid $200 for routine maintenance of a manufacturing machine.
d. Paid $10,000 to remodel an office building.
e. Paid $300 for ordinary repairs

Required:
1. Classify the expenditures as either capital or revenue expenditures.
2. Conceptual Connection: If management improperly classified these expenditures, what would be the impact on the financial statements?


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  • CreatedSeptember 22, 2015
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