Torres Co Has Installed a Piece of Machinery for a Total

question 111

Multiple Choice

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)added to the cost of the machinery.
• B)treated as a repairs and maintenance expense.
• C)capitalized in an asset account.
• D)deducted from cost of the machinery.

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Definitions:

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Oldest Purchases

This refers to the oldest inventory items purchased first, often related to the first-in, first-out (FIFO) inventory management method.

Specific Identification

A method of inventory costing that identifies and assigns the actual cost to each individual item of inventory.

High-cost Items

Products or services that have a significant purchase price or maintenance cost.