Stucki Holdings Corp. incurred the following expenditures: $3,400 cost to replace the transmission in a company-owned vehicle; $16,700 cost of annual property insurance on the company’s production facilities; $14,100 cost to develop and register a design patent; $62,500 cost to add a security and monitoring system to the company’s distribution center; $700 cost to repair paint damage on a company-owned vehicle caused by normal wear and tear. Required:
Which, if any, of these expenditures should be capitalized?

Solution :

1. Nature : Cost to replace the transmission in the company owned vehicle    --- $3,400

Remarks : It is a capital expenditure as the benefit of the transmission is more than 1 year.

2. Nature : cost of annual property insurance on the company’s production facilities $16,700

Remarks : Insurance is considered as an annual expense of the company and the benefits of the company. It is available only for the year of insurance and therefore it is a revenue expense.

3. Nature : cost to develop and register a design patent  --- $14,100

Remark : This expense should be capitalized as the benefits of the design is received for a longer period of time.

4. Nature :  cost to add a security and monitoring system to the company’s distribution center  --- $62,500

Remark : This expense should be capitalized as the benefits of the security as well as the monitoring is received  for more than 1 year.

5. Nature : cost to repair paint damage on a company-owned vehicle caused by normal wear and tear  --- $700

Remark : It is regular and is a maintenance expense. So this expense will not be capitalized.

answerprotecting competitors;

answer: b. false

the staff is a set of five horizontal lines and four spaces which represent a different musical pitch. the lines and the spaces are numbered from bottom to top, the bottom line is the first line and the fifth line is the line on the top. the notes on the top of the staff (fifth line) have a higher pitch than a note at the bottom of the staff.