Exeter Corporation Purchased a Piece of Equipment with a Price

question 41

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.
-A state agency required that a pollution-control device be installed on the equipment at a cost of $5,000.

• 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:

Federal Trade Commission Act

A United States federal law established in 1914 to prevent unfair competition and deceptive practices in the marketplace, creating the Federal Trade Commission.

Robinson-Patman Act

A United States federal law enacted in 1936 to prohibit anticompetitive practices by producers, specifically price discrimination.

Lanham Act

A United States law enacted in 1946 that protects trademarks, service marks, and related intellectual property.

Regulation

Restrictions state and federal laws place on a business with regard to the conduct of its activities.