On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for four-years wlth a $2,000 salvage value

(Capital/Revenue)Capital expenditures are additional costs of plant assets that provide benefits
extending beyond the current period, such as a plant expansion, or machine overhaul.



Consistent with the principle, plant assets should be recorded at cost, which includes all
the normal and reasonable expenditures necessary to get the asset in place and ready for its
intended use.

monetary unit
plant asset
cost
full disclosure

___ are nonphysical assets (used in operations) that confer on their owners long-term rights,
privileges, or competitive advantages.

Natural resource
Intangible assets
Plant assets
Current assets


Accumulated depreciation is a contra asset account (one that is linked with the plant asset account, but
has an opposite normal balance) and is reported on the balance sheet.


(Plant;Current)Plant assets purchased as a group in a single transaction for a lump-sum price (also called
a lump-sum, group, bulk, or basket purchase) are allocated the purchase price based on their relative
market values.


On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for
four-years wlth a $2,000 salvage value. Using the straight-line depreciation method, compute the
machine's first year partial depreciation expense for October 30 through December 31.

$6,000
$1,000
$1,500
$3,000