A major difference between a capital expenditure & a revenue expenditure is

A major difference between a capital expenditure & a revenue expenditure is • the length of time the company benefits from the expenditure. • the amount of the expenditure. • whether the expenditure was approved by management. • whether the expenditure involves inventory.

Runge Inc. purchased machinery on Jan 1 at a list price of $200,000. Credit terms were 2/10, n/30. Payment was made within the discount period. Runge paid $10,000 sales tax on the machinery, and paid installation charges of $3,520. Prior to installation, Runge paid $8,000 to pour a concrete slab on which to place the machinery. What is the total cost of the new machinery? • $209,520 • $217,520 • $221,520 • $202,000

Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be • $14,160 • $11,760 • $9,840 • $9,600

On 1/1/09, equipment was purchased for $17,000. Freight charges amounted to $700 & there was a cost of $2,000 to build a foundation & installing the equipment. It is estimated that the equipment will have a $3,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2010, if the straight-line method of depreciation is used? • $6,680 • $3,340 • $2,860 • $5,720

Answers • A • B • B • A

A major difference between a capital expenditure & a revenue expenditure is