Expenditures after Acquisition}

The following expenditures were incurred during the year:

a. Paid \(\$ 4,000\) for an overhaul of an automobile engine

b. Paid \(\$ 20,000\) to add capacity to a cellular phone company's wireless network

c. Paid \(\$ 200\) for routine maintenance of a manufacturing machine

d. Paid \(\$ 10,000\) to remodel an office building

e. Paid \(\$ 300\) for ordinary repairs Required:

1. Classify the expenditures as either capital or revenue expenditures.

2. CONCEPTUAL CONNECTION If management improperly classified these expenditures, what would be the impact on the financial statements?

\section*{OBJECTIVE 5 Exercise