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Classification into asset/expense

For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers.
A. $200 for repairing damage that resulted from the careless unloading of a new machine.
B. $ 7,000 cost of designing and registering a trademark.
C. $ 1,400 in legal fees incurred to perform a title search for the acquisition of land.
D. $400 cost of patching a leak in the roof of a building.
E. $90,000 cost of salaries paid to the research and development staff.

Solution Preview

For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded. Explain your answers.

A. $200 for repairing damage that resulted from the careless unloading of a new machine.

EXPENSE

The cost of an item of asset comprises its purchase price, and any directly attributable cost of bringing the asset to its working condition for its intended use. Here the cost incurred due to careless unloading of a new machine cannot be construed to be bringing the machine to its working condition or its intended use.

If the cost was initial delivery and handling costs it would have been ...

Solution Summary

For the following expenditures the solution indicate the type of account (asset or expense) in which the expenditure should be recorded.

$2.19