Question

Western Wholesale Foods incurs the following expenditures during the current fiscal year. How should Wesernaunt for each of these expenditures?
1. Salaries for the repair technicians, $156,000
2. Remodeling of the executive offices, $83,100
3. Annual maintenance costs related to its machinery, $79,400
4. Improvement of the production line resulting in an increase in productivity, $38,500
5. Addition of a sprinkler system to the manufacturing facility to reduce the risk of fire damage, $44,100

Answer 1

Answer and Explanation:

The classification is as follows

1.  Since it is a salary for the repair technicians so it would be an expense that is incurred

2. The remodeling should be capitalized and depreciated over their useful life of an asset

3, Since there is an annual maintenance cost, so it would be an expense that is incurred

4. The improvement of the line of production should be capitalized and depreciated over their useful life of an asset

5. Addition of a sprinkler system  should be capitalized and depreciated over their useful life of an asset