Reference no: EM132573318

Question 1: On 10/1/X1, Cameron's Deli purchased a used delivery truck with an estimated remaining life of 7 years for $21,000 paying $7,000 cash down and a note to pay the difference over 5 years at 4.5% interest. In addition, Cameron had to pay sales tax of 6% on the sales price and license and registration fees of $250 on the date of sale. Prior to using the truck, Cameron had to replace all 4 tires at a cost of $450 and have decals of the company's logo and number placed on the truck at a cost of $320. Cameron also paid a $150 insurance premium at the end of the month. Cameron determined the truck would have a salvage value of $1,200 and straight-line depreciation method (if necessary) would be used.

Group of answer choices

Option 1: Immediately Expense all costs incurred in getting hte trucky ready for its use including the purchase price, sales tax, license and registration, tires decals and insurance premiums

Option 2: Capitalize all costs incurred in getting the truck ready for its use including the purchase price, sales tax, license and registration, tires, decals and insurance premiums. These Capitzliaed costs will be depreciated over 7 years.

Option 3: Capitalize the costs incurred in purchasing the truck, including sales tax, license and registration. These capitalized costs will be depreciated over 7 yars. Cameron will immediately expense the remaining costs: tires, decals and insurance premiums

Option 4: None of the above.