Question

UPS is working with the New York State Energy Research and Development Authority to develop new technology that will allow UPS to convert its diesel-fueled delivery trucks to electric- fueled. UPS hopes to have a working model of the converted delivery truck ready sometime in 2018. The plan is to convert 1,500 of the company's delivery vehicles in New York City, representing 66% of its fleet there, by the year 2022. UPS wants to convert its fleet to be all-electric because electric-fueled trucks eliminate harmful emissions, noise, and dependence on fossil fuels. UPS drivers will use the electric trucks during the day and recharge them overnight. Questions 1. What information would you need to be able to determine if UPS should capitalize or expense the cost of converting the trucks to be all-electric? Do you think UPS should capitalize or expense the cost of converting to electric vehicles?

Answer 1

solution & 1 The time pesiod required to realize benefits from the cost of converting the trucks to be all - electric would be needed to be able to determine if Ups should capitalize or expense the cost of conveating the trucks to be all-electric. 2 The benefits of the cost of converting the trucks to be alle electric are expected to accoue in the future coming years. There is likely to be deferred revenue and this ups will capitalize the cost of conventing to electric vehicles