Question

Demmert Manufacturing incurred the following expenditures during the current fiscal year: annual maintenance on its machinery, $10,800; remodeling of offices, $44,000; rearrangement of the shipping and receiving area resulting in an increase in productivity, $70,000; addition of a security system to the manufacturing facility, $50,000. How should Demmert account for each of these expenditures?

Answer 1

Answer and Explanation:

A. Expenditure

1. Annual Maintenance on Machinery

2. Remodelling of Offices

3. Rearraement of the Shipping and Receiving Area

4. Addition of a Security System

B. Amount

1. $7100

2. $23700

3. $36700

4. $26700

C. Classification

1. Normal repairs and maintenance

2. Improvement

3. Rearrangement

4. Addition

D. Accounting Treatment

1. Expensed

2. Capitalized and depreciated

3. Capitalized and depreciated

4. Capitalized and depreciated