Ch12 - E 12-3 Expense or Capitalize a. Capitalize: The...

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E 12-3 Expense or Capitalize a. Capitalize: The warehouse was painted immediately after purchase and before use b. Capitalize: Purchase of new tires is an expenditure to get the asset ready for use. c. Expense: Because of materiality, the wastepaper basket would be a supply item, not a depreciable asset. d. Capitalize: Installation of air-conditioning improves the property and provides benefit for current and future years. e. Expense: Payment of the guard is an ordinary expense whose benefit is used in the period incurred. f. Capitalize: The cost of the overhaul is substantial; thus, it would be classified as a capital expenditure because it extends the useful life of the asset. E 12-4 Expense or Capitalize a. Capitalize b. Expense c. Expense d. Capitalize e. Expense (due to immateriality) f. Capitalize g. Capitalize. The $500 is part of the installation cost of the computer. E 12-9 Calculating Depreciation 1. ($4,500,000 – $750,000)/8 = $468,750 depreciation per year 2. $4,500,000/15 = $300,000 depreciation per year. By depreciating over a longer
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This note was uploaded on 04/11/2009 for the course ACCT 410x taught by Professor Bonner during the Fall '06 term at USC.

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Ch12 - E 12-3 Expense or Capitalize a. Capitalize: The...

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