For each of the following items, indicate whether the costs should be capitalized or expensed immediately.
1. Purchased a patent for $32,000.
2. Paid $715,000 to overhaul a drilling rig. The overhaul will extend the useful life by 3 years.
3. Paid $1,600 for routine maintenance and lubrication of a tractor.
4. Paid $19,000 to install new equipment in the production line that will "super-cool" the product and allow for faster shipping of fresher merchandise.

Question

For each of the following items, indicate whether the costs should be capitalized or expensed immediately.
1. Purchased a patent for $32,000.
2. Paid $715,000 to overhaul a drilling rig. The overhaul will extend the useful life by 3 years.
3. Paid $1,600 for routine maintenance and lubrication of a tractor. 
4. Paid $19,000 to install new equipment in the production line that will "super-cool" the product and allow for faster shipping of fresher merchandise.

Quizplus · Accepted Answer

The Answer of For each of the following items, indicate whether the costs should be capitalized or expensed immediately.
1. Purchased a patent for $32,000.
2. Paid $715,000 to overhaul a drilling rig. The overhaul will extend the useful life by 3 years.
3. Paid $1,600 for routine maintenance and lubrication of a tractor. 
4. Paid $19,000 to install new equipment in the production line that will "super-cool" the product and allow for faster shipping of fresher merchandise.

For Each of the Following Items, Indicate Whether the Costs