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Ch(5): Plant Assets Disposal110After a company acquires a plant asset and puts it intoservice, it often makes additional expenditure for thatasset%u2019s operation, maintenance, repair, and improvement.In recording these expenditure, it must decide whether to capitalize or expense them (to capitalize an expenditure is to debit the assets account). The issue is whether these expenditures are reported as current period expenses added to the plant asset%u2019s costand depreciated over its remaining useful life. Revenue Expenditures,also called income statement expenditures, are additional costs of plant assets that do not materially increase the asset%u2019s life or productive capabilities. They are recorded as expenses and deducted from revenues in the current period%u2019s income statement. Examples of revenues expenditures are cleaning, repainting, adjustments, and lubricants.Capital Expenditures,also called balance sheet expenditures, are additional costs of plant assets that provide benefits extending beyond the current period. They are debited to asset accounts andreported on the balance sheet. Examples are roofing replacement, plant expansion, and major over-hauls of machinery and equipment.Financial statements are affected for several years by the accounting choice of recording costs as either revenue expenditures or capital expenditures. This decision is based on whether the expenditures are identified as repairs or as betterments and extraordinary repairs.Ordinary RepairsOrdinary repairs are expenditures to keep an assetin normal, good operating condition. They are necessary if an asset is to perform to perform to expectations over its useful life. Ordinary repairs do not extend an asset%u2019s useful life beyond its original estimate or increase its productivity beyond original expectations. Examples are normal costs of cleaning, lubricating, adjusting, and replacing small parts of a machine. Objective (2)Distinguish between revenue and capital