Exeter Corporation Purchased a Piece of Equipment with a Price

question 136

Multiple Choice

Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2018.The amounts below are related to the equipment purchase.Match the items below and explain why each revenue expenditure is not capitalized.
-Terms of the purchase were 2/10, net 30.Edison paid for the purchase on March 8.

• A)This item should be included as part of the cost of the equipment.
• B)This item should be considered a revenue expenditure.

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Definitions:

Low-gradient River

A river with a gentle slope, resulting in slow water movement and often meandering courses.

Downcutting

The erosional process by which a river cuts downward into its bed, deepening the river channel.

Discharge

The volume of water flowing through a river or stream or out of a particular structure, often measured in cubic meters per second.

Cubic Meters

A unit of volume in the metric system, indicating the volume of a cube whose sides are each one meter in length.