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Oriole Company had the following two transactions related to its delivery truck. 1. Paid $39 for...

Question:

Oriole Company had the following two transactions related to its delivery truck.

1. Paid $39 for an oil change.

2. Paid $488 to install special shelving units, which increase the operating efficiency of the truck.

Prepare Oriole Company's journal entries to record these two transactions.

Asset related expenses:

There are costs, most especially those that are incurred in connection with the company's assets which are a bit confusing as to whether they should be expensed out or capitalized. A cost that should be expensed out are the costs that are ordinary and necessary for an equipment to function, for example, the cost of changing of tires of a vehicle. On the other hand, a cost should be capitalized if it has improved the quality and usefulness of the asset.

Answer and Explanation: 1

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Account titles Debit Credit
Utilities expense 39
Cash 39

This is considered as an ordinary and necessary expense to the machine.

Account...

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What Are Assets? - Definition & Examples

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Chapter 2 / Lesson 17
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What are assets? Learn the meaning of an asset, the difference between personal and business assets, and who can own assets. See a list of asset examples.


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