Answer:
1. Paid $52,000 cash to replace a compressor on a refrigeration system that extends its useful life by four years - Capital expenditure.
Paid $260 cash per truck for the cost of their annual tune-ups - This is a maintenance cost, a revenue expenditure.
Paid $208 for the monthly cost of replacement filters on an air-conditioning system - This is a maintenance cost, a revenue expenditure.
Completed an addition to an office building for $292,500 cash - Capital expenditure.
2. Debit Fixed asset (equipment) $52,000
Credit Cash $52,000
Being entries to capitalize the cost of compressor replaced
Debit Fixed asset (Building) $292,500
Credit Cash $292,500
Being entries to record the cost of addition to an office building
Explanation:
Revenue expenditure are cost or expenses incurred on items that would not last beyond a year. They are current in nature. Capital expenditure are cost incurred on items that will last beyond a year.
In other words, cash inflows from an items of capital expenditure are expected to flow to the entity for more than a year.
