A Manufacturer of Plastic Bottles for the Medical Trade Purchases

question 69

Multiple Choice

A manufacturer of plastic bottles for the medical trade purchases a new compression blow molder for its bottle production plant. How will the cost to the company of this piece of equipment be recorded?

• A) It will be depreciated over time on the income statement and subtracted as a capital expenditure on the statement of cash flows.
• B) It will be depreciated over time on the income statement and subtracted as Inventory on the statement of cash flows.
• C) It will be depreciated over time on the income statement and therefore not be recorded separately on the statement of cash flows.
• D) It will be subtracted from Gross Profit on the income statement and therefore, not be recorded separately on the statement of cash flows.

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