Question

Assume it is March of 2018: Will the costs of converting UPS trucks from diesel to electric be capitalized or expensed? UPS is working with the New York State Energy Research and Development Authority to develop new technology that will allow UPS to convert its diesel-fueled delivery trucks to electric- fueled. UPS hopes to have a working model of the converted delivery truck ready sometime in 2018. The plan is to convert 1,500 of the company's delivery vehicles in New York City, representing 66% of its fleet there, by the year 2022. UPS wants to convert its fleet to be all-electric because electric-fueled trucks eliminate harmful emissions, noise, and dependence on fossil fuels. UPS drivers will use the electric trucks during the day and recharge them overnight.

Answer 1

We can categorise the expense on the basis of some of the future impacts as stated in the answer.

Answer: (a) I need the information of extented life period of the trucks after conversion into electric. (6) As per the accounting Standard, the expense must be capitalised it! - it increases the life period of the asset - it increases the efficiency in operations Iconclusion As the trucks which are into converted mode, will increase its electric life period & the expense efficiency must be in working. Hence capitalised.