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MULTI-CONCEPT EXERCISES Exercise 8-11 Capital versus Revenue Expenditures on January 1, 2010, Jose Company purchased a building for 5200,000 and a delivery truck for 520,000.
MULTI-CONCEPT EXERCISES Exercise 8-11 Capital versus Revenue Expenditures on January 1, 2010, Jose Company purchased a building for 5200,000 and a delivery truck for 520,000. The following expenditures have been incurred during 2012: ? The building was painted at a cost of $5,000." ? To prevent leaking, new windows were installed in the building at a cost of $10,000._ ? To improve production, a new conveyor system was installed at a cost of $40,000. L? The delivery truck was repainted with a new company logo at a cost of $1,000. ? To allow better handling of large loads, a hydraulic lift system was installed on the truck at a cost of $5,000. ? The truck's engine was overhauled at a cost of $4,000. Required 1. Determine which of those costs should be capitalized. Also, identify and analyze the effect of the capitalized costs. Assume that all costs were incurred on January 1, 2012. 2. Determine the amount of depreciation for the year 2012. The company uses the straight-line method and depreciates the building over 25 years and the truck over six years. Assume ze residual value for all assets. 3. How would the assets appear on the balance sheet of December 31, 2012
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