For the following questions, circle the best response.
Expenditures incurred on long-term assets after they have been placed in service are either capitalized or expensed. Which of the following statements concerning such expenditures is true?
a. Capitalized amounts represent future economic benefits that extend beyond one year.
b. Expensed amounts benefit no more than three future years.
c. Capitalized amounts decrease net income for the entire amount in the year of the expenditure.
d. Expensed amounts are added to the net book value of the related asset.
e. Immaterial amounts should always be capitalized.
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