Difference between capital and revenue expenditures

Response to the following problem:

Accountants distinguish between capital and revenue expenditures for some types of transactions. The entries for such transactions can be made to any one of the following accounts:

Balance sheet accounts

a. Land

b. Buildings

c. Equipment

d. Trucks

e. Automobiles

f. Accumulated depreciation Income statement accounts

g. A revenue account

h. An expense account.

Required: For each transaction below, indicate the account to be adjusted. Explain your answers and state any assumptions you make.


__b__ Architect fees to design building

Battery purchased for truck

Cash discount received on payment for equipment

Commission paid to real estate agent to purchase land

Cost of equipment test runs

Cost to remodel building

Cost to replace manual elevator with automatic elevator

Cost of sewage system

Equipment assembly expenditure

Expenditures for debugging equipment

Installation of air-conditioner in automobile

Insurance paid during construction of building

Legal fees associated with court case to defend title to land purchased

Oil change for truck

Payment for landscaping

Proceeds received on demolition of derelict building on land purchased

Expenditures for removal of derelict structures

Repair made to building after moving in

Repair of collision damage to truck

Repair of torn seats in automobile

Replacement of rusted fender on automobile

Replacement of transmission in automobile

Special floor foundations for installation of equipment

Tires purchased for truck

Transportation expenditures to bring equipment to plant.

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Accounting Basics: Difference between capital and revenue expenditures
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