Exeter Corporation Purchased a Piece of Equipment with a Price

Multiple Choice

Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2018.The amounts below are related to the equipment purchase.Match the items below and explain why each revenue expenditure is not capitalized.
-The company purchased a three-year liability insurance policy to cover possible damage caused by the new equipment at a cost of $6,000.

A) This item should be included as part of the cost of the equipment.
B) This item should be considered a revenue expenditure.