Answer:
a. Initial lease payment of $5,000 for electronic point-of-sale cash register systems.
Operating expenditure. This is like regular rental payments. No Asset is created.
b. An outlay of $20,000 to purchase patent rights from an inventor.
Capital Expenditure. An Asset is acquired & it will written off over its life. Patent life is usually 20 yrs
c. An outlay of $80,000 for a major research and development program.
Operating Expenditure. No Asset is created. This expenditure will be passed through P&L acct
d. An $80,000 investment in a portfolio of marketable securities.
Capital Expenditure. Investment in security a/c is an Asset acct & will be in Balance sheet
e. A $300 outlay for an office machine.
Capital Expenditure. Office machine is an Asset.
f. An outlay of $2,000 for a new machine tool
Operating Expenditure. Machine tool is a expenses item
g. An outlay of $240,000 for a new building.
Capital Expenditure. A New Assets created in Balance sheet
h. An outlay of $1,000 for a marketing research report.
Operating Expenditure: This expenditure is passed through P&L
