Question

The installation expenses for a new machinery will be debited to __________.

• A. installation expenses account
• B. cash account
• C. machinery account
• D. profit and loss account

Answer 1

The correct option is C machinery account

Capital expenditure are those which are incurred for procuring an asset. Like purchase of plant, building etc. The installation expenses for a new machinery will be debited to machinery account.

All the incidental expenses incurred in reference to an asset till the asset is ready for put to use are treated as part of the asset cost and to be debited to the respective asset account.