Assets are the cornerstone of financial reporting; often it is unclear whether an expenditure is an asset or an expense. For each of the transactions described below, consider whether the expenditure should be recorded as an asset or as an expense. Be sure to discuss the specific criteria in your response. Assume all items are material.
a. Akamu Limited operates an oil change shop and buys windshield washer fluid to top up customers’ reservoirs.
b. John & John Massage Therapists pay $600 to a receptionist for taking appointments and issuing receipts to clients.
c. On October 1, Alan & Cheng, Chartered Professional Accountants, pay $500 to a local snow removal service for the upcoming winter season.
d. Luca Inc. is a contractor that cuts trees for the local sawmill. Luca pays $1,000 for a chainsaw.
e. Pharma Inc. incurs legal fees of $5,500 for registering a patent for its product.
f. Delhi Florists pays $4,500 for shipping charges for the delivery of flowers.
g. Sports Starts Here Inc. spent $4,500 installing hardwood floors in its leased store located in a mall.
