The purchase of a new cooling system for $150,000 to upgrade an office building owned by the company would be accounted for as:
A)Goodwill.
B)An addition in the Buildings account.
C)An expense in the period incurred.

Question

Quizplus · Accepted Answer

The purchase of a new cooling system would be categorized as an addition in the Buildings account, as it is a capital expenditure that enhances the value of the building. It would not be considered goodwill, as goodwill is an intangible asset recorded only when a company purchases another business. It would also not be recorded as an expense in the period incurred, as expenses are costs associated with the day-to-day operations of a business and are typically expensed in the period they occur.

The Purchase of a New Cooling System for $150,000 to Upgrade