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:

Capital Gains

The profit from the sale of assets or investments when the selling price exceeds the original purchase price.

Adjusted Gross Income

An individual's total gross income minus specific deductions. It's used as the basis for calculating taxable income.

Tax-deferred

An investment in which taxes on the principal and/or earnings are delayed until the funds are withdrawn, commonly seen in retirement accounts like 401(k)s and IRAs.

Accumulation Period

The time frame in which an investment, such as a annuity, accumulates interest or income before disbursement or annuitization.