Which of the Following Expenditures Should NOT Be Capitalized

question 106

Multiple Choice

Which of the following expenditures should NOT be capitalized?

• A)the costs of testing a new machine to get it ready for use
• B)purchasing factory equipment with an estimated useful life of 7 years
• C)purchasing a used truck with an estimated 40,000 miles of service life remaining
• D)the costs of changing the oil in the company's fleet of delivery trucks

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Definitions:

Price Sellers Receive

The amount of money that producers get from selling one unit of a good or service, after considering all costs and expenses.

Consumer Surplus

The dissimilarity in what consumers intend to pay for a good or service versus what they actually spend.

Producer Surplus

The disparity between the minimum amount sellers are ready to take for a product or service and the actual price they get in the market.

Price Received

The amount of money paid to a seller or producer for a good or service, excluding any taxes, fees, or additional charges.