Question

Listed below are costs (or discounts) to purchase or construct new plant assets.

1. Indicate whether the costs should be expensed or capitalized (included in the cost of the plant assets on the balance sheet.)
2. For costs that should be, indicate in which category of plant assets (Equipment, Building, or Land) the related costs should be recorded on the balance sheet.
1. Charges incured to train employees to use new equipment.
2. Invoice cost to purchase new equipment
3. Deduction for an earl payment discount taken on the puchase of new equipment.
4. Real estate commissions incurred on land purchased for a new plant.
5. Property taxes on land incurred after it was purchased
6. Costs of tune-up for the truck used to deliver new equipment
7. Costs to lay foundation for a new building
8. Insurance on a new building during the construction phase.

Answer 1

Answer: Please see below for answer.

Explanation: Indicating costs as expensed or capitalized and stating the category of the assets

Captalized costs are costs added to the fixed assets accrued from buying and financing of a fixed assets which are not being deducted from revenues when they were incurred but over a period of time when calculating depreciation or amortization of the asset.

Expenses are the costs of an asset used by a company in running its operations which are deducted from revenue to determine the real revenue of a company.

1. Charges incurred to train employees to use new equipment.

----- Expensed ; nil

2. Invoice cost to purchase new equipment

---- Capitalized; Equipment cost

3. Deduction for an earl payment discount taken on the purchase of new equipment.

------- Capitalized; Equipment cost

4. Real estate commissions incurred on land purchased for a new plant.

--------Capitalized; Land cost

5. Property taxes on land incurred after it was purchased

------- Expensed; nil

6. Costs of tune-up for the truck used to deliver new equipment

---Expensed; nil

7. Costs to lay foundation for a new building

------Capitalized; Building cost

8. Insurance on a new building during the construction phase.-----Capitalised ; Building cost