Orion Flour Mills purchased a new machine and made the following expenditures: ...

Orion Flour Mills purchased a new machine and made the following expenditures:


Purchase price	$61,000
Sales tax	5,300
Shipment of machine	860
Insurance on the machine for the first year	560
Installation of machine	1,720

The machine, including sales tax, was purchased on account, with payment due in 30 days. The other expenditures listed above were paid in cash.

Record the above expenditures for new machine.

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Abbott Landscaping purchased a tractor at a cost of $39,000 and sold it three years later for $19,800. Abbott recorded depreciation using the straight-line method, a five-year service life, and a $2,500 residual value. Tractors are included in the Equipment account.

1.Record the sale.

2. Assume the tractor was sold for $12,400 instead of $19,800. Record the sale

Expert Solution

ekkarill92 answered 1 year ago

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Expenditures made to extend an asset's life are called revenue expenditures. True False

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