Question

multiple select question
select all that apply
which of the following statements is (are) accurate regarding equipment purchased within a business?

• equipment purchases are reported on the balance sheet.
• equipment cost is initially recorded as an asset and the cost is allocated over time to expense.
• equipment is reported on the left side of the accounting equation.
• equipment purchases are expensed, in their entirety, in the period in which they occur.
• equipment is an asset.

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Explanation:

• Equipment is a long-term asset, so it is reported on the balance sheet (a financial statement listing assets, liabilities, equity).
• Equipment is capitalized as an asset at purchase, and its cost is expensed over its useful life via depreciation.
• The accounting equation is $\text{Assets} = \text{Liabilities} + \text{Equity}$; assets appear on the left side, so equipment (an asset) is on the left.
• Equipment is not fully expensed in the purchase period (this would be incorrect for capital assets; only revenue expenditures are expensed immediately).
• Equipment is a tangible long-term asset used in business operations, so it qualifies as an asset.

Answer:

A. Equipment purchases are reported on the balance sheet.
B. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense.
C. Equipment is reported on the left side of the accounting equation.
E. Equipment is an asset.