Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 2 - Conceptual Framework for Financial Reporting - Brief Exercises - Page 71: BE2-13c

Answer

This is an asset and therefore a capital purchase.

Work Step by Step

Purchase of the meat-grinder should be capitalized in the statement of financial position as an asset of the organization rather than being expensed. Additionally, it should also be depreciated over the years of use alongside its revenue.
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