Question

Ace, Inc. just bought a new delivery truck. Which of these costs should be capitalized?1. The $500 for insurance on the truck for the next 12 months2. The $25,000 cost of the truck3. The $2,000 paid to install shelves inside the truck4. The $50 a week for gas to run the truck.

Answer 1

Answer:

2. The $25,000 cost of the truck and 3. The $2,000 paid to install shelves inside the truck4.

Explanation:

The cost to be capitalized are those necessary to being the assets to a state and place where it becomes available for use.

This cost includes the $25,000 cost of the truck and $2,000 paid to install shelves inside the truck.

Other costs such as $50 a week for gas to run the truck and $500 for insurance on the truck for the next 12 months are to be expensed.