Answer:
To Capitalize or Expense
a. Expense
b. Expense $2,700 Capitalize $2,700
c. Capitalize
d. Expense
e. Capitalize
f. Capitalize
Explanation:
1) Data and Analysis:
a. Maintenance Expense $1,200 Cash $1,200
b. Rent Expense $2,700 Prepaid Rent $2,700 Cash $5,400
c. Equipment $2,000 Cash $2,000
d. Building Repair Expense $20,000 Cash $20,000
e. Equipment Extension $1,600 Cash $1,600
f. Patent $5,000 Cash $5,000
2) All costs incurred for a period are expensed in the period in which the resources are consumed. If the resources will not be consumed in a period, the costs are capitalized. Such costs are then expensed periodically through depreciation (for tangible assets), amortization (for intangible assets), or depletion (for acquired natural resources).
