Indicate Whether Each of the Following Items Normally Would Be

question 118

Essay

Indicate whether each of the following items normally would be considered a capital expenditure (C) or a revenue expenditure (R).
_____ 1. Replacement of shake roof with tile roof
_____ 2. Cost to replace light bulbs
_____ 3. Window-cleaning costs
_____ 4. Cost to rebuild company vehicle engine
_____ 5. Cost to construct parking lot
_____ 6. Cost of a wastebasket

---

Definitions:

Asymmetric Information

A scenario where one participant in a deal possesses greater or more advanced information than the other.

Adverse Selection

A situation where uneven information leads to transactions between parties where one party has more or better information than the other, often seen in insurance markets.

Occur

To happen or take place, referring to events or phenomena.

Adverse Selection

A situation in which one party in a transaction has more information than the other, often leading to an imbalance in which high-risk individuals are more likely to select and benefit from certain agreements, policies, or products.