➢ Indicate which type of account (asset, accumulated depreciation, or expense) would be debited for each...
➢ Indicate which type of account (asset, accumulated depreciation, or expense) would be debited for each of the following expenditures:
➢ Painting an office building at a cost of $ 1,000. The building is painted every year.
➢ Adding on a new plant wing at a cost of $ 24,000,000.
➢ Expanding a paved parking lot at a cost of $ 144,000.
➢ Replacing a stairway with an escalator at a cost of $ 20,000.
➢ Replacing the transmission in an automobile at a cost of $ 1,600, thus extending its useful life two years beyond the original estimate.
➢ Replacing a broken fan belt at a cost of $ 600.
➢ How do subsidiary records provide control over a company’s plant assets?
Homework Answers
(a) Painting cost of $1000 is incurred every year. It is an expense. So, it will be debited in expense account.
(b) New plant wing for $24000000 is a capital expenditure, so it will be debited in asset account.
(c) Expanding a paved parking lot for $144000 is a capital expenditure, so it will be debited in asset account.
(d) Replacing the stairway for $20000 is a capital expenditure, so it will be debited in asset account.
(e) Replacing transmission for $1600 is a capital expenditure, so it will be debited in asset account.
(f) Replacing broken fan belt for $600 is a normal business expense. So, it will be debited in expense account.
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➢ Indicate which type of account (asset, accumulated
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