Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2018.The amounts below are related to the equipment purchase.Match the items below and explain why each revenue expenditure is not capitalized.
-$3,000 freight costs were paid to ship the equipment from the manufacturer.
A)This item should be included as part of the cost of the equipment.
B)This item should be considered a revenue expenditure.

Question

Quizplus · Accepted Answer

Freight costs paid to ship the equipment from the manufacturer are directly associated with bringing the asset to its intended location and condition for use. Therefore, these costs are capitalized as part of the equipment's cost, not treated as a revenue expenditure.

Exeter Corporation Purchased a Piece of Equipment with a Price