Question

11. EX.09-13 Capital and Revenue Expenditures Warner Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service: Classify each of the costs as a capital expenditure or a revenue expenditure. Classification Cost 1. Changed the oil and greased the joints of all the trucks and vans. Changed the radiator fluid on a truck that had been in service for the past four years. 3. Installed a hydraulic lift to a van. 4. Installed security systems on four of the newer trucks. 5. Overhauled the engine on one of the trucks purchased three years ago. 6. Rebuilt the transmission on one of the vans that had been driven 40,000 miles. The van was no longer under warranty. 7. Removed a two-way radio from one of the trucks and installed a new radio with a greater range of communication. 8. Repaired a flat tire on one of the vans. Replaced a truck's suspension system with a new suspension system that allows for the delivery of heavier loads. Tinted the back and side windows of one of the vans to discourage theft of contents.

Answer 1

1. Revenue expenditure

2. Revenue expenditure

3. Capital expenditure

4. Capital expenditure

5. Capital expenditure

6. Capital expenditure

7. Capital expenditure

8. Revenue expenditure

9. Capital expenditure

10. Capital expenditure

Answer 2

Six out of ten