Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. redline publishers, inc. produces various manuals

Redline Publishers, Inc. produces various manuals ranging from computer software instructional booklets to manuals explaining...

50.1K

Verified Solution

Question

Accounting

Redline Publishers, Inc. produces various manuals ranging from computer software instructional booklets to manuals explaining the installation and use of large pieces of industrial equipment. At the end of 2018, the company's balance sheet reported total assets of $62 million and total liabilities of $40 million. The income statement for 2018 reported net income of $1.1 million, which represents an approximate 3% increase from the prior year. The company's effective income tax rate 30%. Near the end of 2018, a variety of expenditures were made to overhaul the company's manufacturing equipment. None of these expenditures exceeded $750, the materiality threshold the company has set for the capitalization of any such expenditure. Even though the overhauls extended the service life of the equipment, the expenditures were expensed, not capitialized.

John Henderson, the company's controller, is worried about the treatment of the overhaul expenditures. Even though no individual expenditure exceeded the $750 materiality threshold, total expenditures were $70,000.

Required:

Should the expenditures be capitialized or expensed?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Advance Math
1.2K views

The least common multiple of nonzero integers a and b is the smallest positive integer m...

Medical Sciences
1.2K views

What is the role of collagen in ligament healing? What properties of collagen makes it suitable...

Geometry
1.2K views

A simple dart target has two concentric circles The larger circle has a radius of...

Statistics
1.2K views

Points 0 of udy determined that 7 of children under 18 years old lived with...

Algebra
1.2K views

A city doubles its size every 41 years If the population is currently 700 000...

Algebra
1.2K views

A. Use double integral and polar coordinates to calculate the size of a tower bounded...

Accounting
1.2K views

Bond proceeds used to construct a new library should be recorded in: Select one: a....

Accounting
1.2K views

Is the basis of a property (for purposes of determining gain or loss realized on...

Accounting
1.2K views

Dana's Ribbon World makes award rosettes. Following is information about the company: Required: 1. Determine...

Accounting
1.2K views

HCC 222 Problem 125%) stock transactions for Harris Inc. follow: Feb. 16 1ssued 27,000 shares...

Finance
1.2K views

slove correct otherwise I will devote it P 11-5 (similar to) Question Help You...

Finance
1.2K views

Question 2 4 pts Questions (Al-A2) are based on the information that follows. Net earnings...