Expenditures which should be capitalized

Reference no: EM13140143

During 2004, Yvo Corp. installed a production assembly line to manufacture furniture. In 2005, Yvo purchased a new machine and rearranged the assembly line to install this machine. The rearrangement did not increase the estimated useful life of the assembly line, but it did result in significantly more efficient production. The following expenditures were incurred in connection with this project:

Machine $75,000
Labor to install machine 14,000
Parts added in rearranging the assembly line
to provide future benefits 40,000
Labor and overhead to rearrange the assembly line 18,000

What amount of the above expenditures should be capitalized in 2005?

a. $147,000

b. $107,000

c. $ 89,000

d. $ 75,000

Reference no: EM13140143

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