Which of the following should be recorded as an expense in the period when the activity takes place?
A)Nationwise,Inc.routinely replaces the wiper blades on its fleet of delivery trucks.
B)ResolCo paid $100,000 to buy a new piece of equipment.
C)Revel,Inc.paid $10,000 to overhaul and improve a machine to make it last longer.
D)Rondeaux Company paid $50,000 for the exclusive right to manufacture a product.

Question

Quizplus · Accepted Answer

The routine replacement of wiper blades is an ongoing expense that happens regularly and should be recorded in the period when the activity takes place.

Answer: B 
 The purchase of a new piece of equipment should be recorded as an asset and depreciated over its useful life, not recorded as an expense in the period when the activity takes place.

Answer: C 
 The overhaul and improvement of a machine should be recorded as an increase in the asset's value and depreciated over its useful life, not recorded as an expense in the period when the activity takes place.

Answer: D 
 The exclusive right to manufacture a product should be recorded as an asset and amortized over the period of the agreement, not recorded as an expense in the period when the activity takes place.

Which of the Following Should Be Recorded as an Expense