Which of the following costs related to the purchase of production equipment would be considered a revenue expenditure?
A)installation costs for equipment
B)purchase price of the equipment less the cash discount
C)repair and maintenance costs during the equipment's first year of service
D)transportation charges for getting the equipment delivered to the business

Question

Quizplus · Accepted Answer

Repair and maintenance costs during the equipment's first year of service would be considered a revenue expenditure because it is an ongoing cost that keeps the equipment functioning properly and does not add to its overall value. The other choices are all capital expenditures that add to the value of the equipment and would be spread out over its useful life through depreciation. Installation costs, purchase price, and transportation charges are all costs that increase the initial investment in the equipment and would be capitalized.

Which of the Following Costs Related to the Purchase of Production