Fleming Company Purchased a Machine on January 1, 2018

question 36

Essay

Fleming Company purchased a machine on January 1, 2018. In addition to the purchase price paid, the following additional costs were incurred: (a) sales tax paid on the purchase price, (b) transportation and insurance costs while the machinery was in transit from the seller, (c) personnel training costs for initial operation of the machinery, (d) annual city operating license, (e) major overhaul to extend the life of the machinery, (f) lubrication of the machinery gearing before the machinery was placed into service, (g) lubrication of the machinery gearing after the machinery was placed into service, and (h) installation costs necessary to secure the machinery to the building flooring.
Instructions
Indicate whether the items (a) through (h) are capital or revenue expenditures in the spaces provided: C = Capital, R = Revenue.
(a)_____________ (b)______________ (c)______________ (d)______________
(e)_____________ (f)______________ (g)______________ (h)______________

Grasp the financial implications of using a standard cost system on inventory valuation.

Comprehend the role of budgeting in setting standard costs.

Understand the purpose and importance of gathering meaningful accounting metrics for assessing employee or unit performance within a company.

Recognize the limitations and context-required nature of accounting metrics.

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Definitions:

Credit Sales

Sales made by a business where payment is delayed, allowing the buyer to purchase goods or services on credit.

Direct Method

A way of reporting cash flows from operating activities that lists major categories of gross cash receipts and gross cash payments.

Depreciation Expense

The distribution of a physical asset's cost throughout its lifespan.

Operating Activities

Business actions that are part of a company's primary operations, including revenue generation and expenses tied to its core business functions.