A few days ago
Plts J

Accounting: Question about income statement.?

If a business has purchased a truck for the business, should I put the truck under the expenses on income statement?

I think I should, but I’m not sure, cause the delivery truck contributes to the revenues. Thanks.

Top 3 Answers
A few days ago
CuriousKelly22

Favorite Answer

You are correct, the truck will contribute to revenues and should not be expensed. Rather, the truck is an asset to the company and should classified accordingly as equipment. The cost of the truck needs to be matched with the revenues that it will produce over its useful life. To do this, you will depreciate the truck over its useful life so that each year the deprication expense will be matched against revenues on the income statement.

Yes, this is a higher education question.

For instance, you buy a truck for $10,000. You estimate that it’s useful life is 10 years and we will assume there is no salvage value. So 10,000/ 10 years =$1000 a year. Every year for the next 10 years you will recognize a depreciation expense for the truck of $1000 and all expenses are matched against revenues on the income statement to determine Net Income.

If this is not a textbook question, there may be other factors at play. You can expense a truck if it is immaterial. Meaning if the company has like millions or hundred of millions in sales then a $10000 truck is immaterial and can be expensed. Also, tax reporting is totally different from financial reporting (Income statement.. etc.).

0

A few days ago
myl
i don’t think so, you can record truck as asset(capital expenditure). and it depend on what business that you are running. if you are buying the delivery truck for trading, you can record truck as inventory (current asset). but if you buy the truck for delivery you can record as fixed asset cause the delivery truck can be used more than one period and it has contribute for the revenue.
0

A few days ago
Bristol
Good luck with finding an answer, but I don’t think it should be in the “Higher Education” category…

AND, my answer for you is that yes, it should… but I’m not an expert.

0