Question

Torres Co. has installed a piece of machinery for a total of $45,000. In its third month of operation, repairs of $900 had to be made on the machine. This $900 would be:

A. capitalized in an asset account.

B. treated as a repairs and maintenance expense.

C. deducted from cost of the machinery.

D. added to the cost of the machinery.

Answer 1

The $900 spent on machinery repairs by Torres Co. should be recorded as a repairs and maintenance expense and expensed in the same period the repairs were made.

Step-by-step explanation:

The $900 spent on repairs for the piece of machinery installed by Torres Co. should be treated as a repairs and maintenance expense. This cost is incurred during the normal operation of the machinery and does not add to its original value or extend its life. Therefore, it should be expensed in the period in which the repairs were made. It should not be capitalized in an asset account, deducted from the cost of the machinery, or added to the cost of the machinery.