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Question 11.1: Consider the costs that are incurred by a local pizza busine...

Consider the costs that are incurred by a local pizza business. Identify each cost as either expensed or depreciated and explain why

• Cost of pizza dough and toppings

• Cost of new delivery van

• Cost of wages for janitor

• Cost of furnishings in dining room

• Cost of a new baking oven

• Utility costs for soft  drink refrigerator

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Cost Item Type of Cost Why
Pizza dough and toppings Expensed Life < 1 year, loses value immediately
New delivery van Depreciated Meets 3 requirements for depreciation
Wages for janitor Expensed Life < 1 year, loses value immediately
Furnishings in dining room Depreciated Meets 3 requirements for depreciation
New baking oven Depreciated Meets 3 requirements for depreciation
Utilities for soft drink refrigerator Expensed Life < 1 year, loses value immediately

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