Question

Plant assets often require expenditures subsequent to acquisition. It is important that they be accounted for property. Any errors will affect both the balance sheets and income statements for a number of years. For each of the following items, indicate whether the expenditure should be capitalized or expensed in the period incurred. Items Improvement (a) (b) Replacement of a minor broken part on a machine Expenditure that increases the useful life of an existing asset. (d) Expenditure that increases the efficiency and effectiveness of a productive asset but does not increase its salvage value. le) Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset's salvage value () Expenditure that increases the quality of the output of the productive asset Improvement to a machine that increased its fair market value and its production capacity by 3036 Without extending the machine's useful life ch Ordinary repairs.

Answer 1

Answer:

a. Improvment = It is a Capitalized.

b Replacment of minor broken part on a machine =Expensed

c Expenditure that increase the useful life of an existing MAchine =Capitalized.

d =Capitalized

e = Capitilized

f =Capitilized

g   =Capitilized

h =Expensed.