AB 116 WEEK 3 LEARNING ACTIVITY

AB 116 WEEK 3 1 Go through all of the items and Indicate which one is a capital or revenue expenditure C or R. 

C = Capital, R = Revenue.
Martinez Company purchased a machine on January 1, 2014. In addition to the purchase price paid, the following additional costs were incurred:
   ______        (a) sales tax paid on the purchase price
   ______        (b) transportation and insurance costs while the machinery was in transit from the seller
   ______        (c) personnel training costs for initial operation of the machinery
   ______        (d) annual city operating license
   ______        (e) major overhaul to extend the life of the machinery
   ______        (f) lubrication of the machinery gearing before the machinery was placed into service
   ______        (g) lubrication of the machinery gearing after the machinery was placed into service
   ______        (h) installation costs necessary to secure the machinery to the building flooring

 	Student Answer:		   : (a) sales tax paid on the purchase price	   »   4 : C
 			   : (b) transportation and insurance costs while the machinery was in transit from the seller	   »   2 : C
 			   : (c) personnel training costs for initial operation of the machinery	   »   5 : C
 			   : (d) annual city operating license
   »   6 : R
 			   : (e) major overhaul to extend the life of the machinery	   »   3 : C
 			   : (f) lubrication of the machinery gearing before the machinery was placed into service	   »   7 : C
 			   : (g) lubrication of the machinery gearing after the machinery was placed into service	   »   1 : R
 			   : (h) installation costs necessary to secure the machinery to the building flooring	   »   8 : C