Original blog posting March 7 2017 Zume Pizza Based in Mountain View California Pizza truck holds 56 ovens that are connected to ordering system and GPS Robots help make the pizzas Pizzas are put in the oven four minutes before truck reaches the customers house ID: 806723
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Slide1
In a Zume Pizza delivery truck that uses a combination of robots, AI, and GPS in pizza preparation and delivery, what will be capitalized versus expensed?
Original blog posting (March 7, 2017)
Slide2Zume PizzaBased in Mountain View, CaliforniaPizza truck holds 56 ovens that are connected to ordering system and GPSRobots help make the pizzasPizzas are put in the oven four minutes before truck reaches the customer’s house
Slide3Zume Pizza started in Mountain View, California
Slide4Zume Pizza truck
Slide5Plain white panel trucks are customized to become Zume Pizza trucks
Slide6Customer orders pizza
Slide7Humans toss the dough, cut vegetables, and put on toppings
Slide8Robots put on pizza sauce
Slide9Truck has 56 ovens. Each oven is connected to order system and GPS
Slide10Robots put pizzas in oven exactly four minutes before truck reaches the house
Slide11Humans pull out pizza and put it into the cutter
Slide12Pizza is delivered
Slide13Question 1Would Zume capitalize or expense the cost of the white panel truck itself?
Slide14Question 2Would Zume capitalize or expense the cost of the 56 pizza ovens inside the truck?
Slide15Question 3Would Zume capitalize or expense the cost of the custom paint job on the exterior of the truck?
Slide16Question 4If a Zume Pizza truck needs replacement tires after it has been driven 75,000 miles, is the cost of those tires capitalized or expensed by Zume? Why does it matter?
Slide17Question 5What is the impact of capitalizing an item on the balance sheet? On the income statement?
Slide18Question 6What is the impact of expensing an item on the balance sheet? On the income statement?
Slide19Question RecapWould Zume capitalize or expense the cost of the white panel truck itself?Would Zume capitalize or expense the cost of the 56 pizza ovens inside the truck?Would Zume capitalize or expense the cost of the custom paint job on the exterior of the truck?
If a
Zume
Pizza truck needs replacement tires after it has been driven 75,000 miles, is the cost of those tires capitalized or expensed by
Zume
? Why does it matter?
What is the impact of capitalizing an item on the balance sheet? On the income statement?
What is the impact of expensing an item on the balance sheet? On the income statement?
Slide20For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Questions or comments? Contact Dr. Wendy Tietz at wtietz@kent.edu