Stillwater Youth Programs (SYP) purchased a used school bus to use in transporting children for its after-school program. SYP incurred the following expenses related to the bus in 2012:
1. Painted the SYP logo on the bus for $3,000 to help promote the after-school program.
2. Installed new seats on the bus at a cost of $5,000.
3. Installed a DVD player and sound system to entertain the children in-transit and announce upcoming events at a cost of $1,000.
4. Paid insurance on the school bus for 2012, which increased 10% over the prior year to an annual premium of $2,800.
5. Performed annual maintenance and repairs for $1,400.
6. Overhauled the engine at a cost of $6,500, increasing the service life of the bus by an estimated three years.
Required:
Indicate whether SYP should capitalize or expense each of these expenditures.
How could SYP use expenditures like these to increase reported earnings?