Decide whether the following expenditures should be put into an asset or expense account. (a) The cost

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Decide whether the following expenditures should be put into an asset or expense account.

(a) The cost of an insurance policy, which had been purchased by Y Ltd to cover goods in transit to the company from suppliers for the current year.

(b) The salary for the general manager in charge of plant operations for Z Manufacturing Ltd. The cash component of the salary is $100 000; employer-contributed superannuation is $20 000, and the general manager is offered 40 000 share options in the company to be exercised after two years at 50 per cent of the market value of the shares at the date the options are exercised. Cover each component of the general manager's remuneration in your answer.

(c) The legal fees incurred in the unsuccessful prosecution of a patent infringement suit.

(d) The fees paid to a consultant who designed a more efficient layout for plant operations.

(e) The fees paid to an underwriter for handling the share issue when 'T Ltd was first established.AppendixLO1

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Accounting Theory

ISBN: 9780470818152

7th Edition

Authors: Jayne Godfrey, Ann Tarca, Allan Hodgson, Jane Hamilton, Scott Holmes

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