Lime

$($formerly known as

LimeBike$),$

located in San$$ Mateo, California, is a startup founded in

$20172017.$

Its mission is to make shared bicycles accessible and affordable. The company has taken the basic idea of shared bicycles and eliminated the need to return the bike to a docking$$ station, which may not be near the$$ cyclist's destination.

Lime

charges$$ $$1$ per $30$ minutes of$$ riding, or$$ $$0\mathrm{.}50$ per ride for students.

View additional information.

LOADING...

Read the requirements.

LOADING...

Question content area bottom

Part $1$

Requirement $1.$ For each of the following$$ items, identify whether the cost of the item would be expensed or capitalized at

Lime$$:

Item

Capitalized or Expensed?

a$.$ Customized bikes from Trek and Specialized

$$

b$.$ Development costs of Lime$$s app for locating, paying, and returning bikes

$$

c$.$ Salary of the salesperson who works to get cities to adopt Lime's program

$$

d$.$ Replacement tires for bikes

$$

e$.$ Routine bike maintenance including chain lubrication, brake pad replacement, and drivetrain cleaning

$$

f$.$ Electricity and other utilities in the company$$s administrative offices

$$

Part $2$

Requirement $2.$ Why does it matter whether a cost item is expensed or$$ capitalized? Explain.

An expense reduces income in the

$$

$$

in the current period

through depreciation in the future

$.$

A captialized cost means the$$ long$-$term asset$($except for$$ land$)$ will be expensed

$$

$$

in the current period

through depreciation in the future

$.$