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How should the entity account for the cost

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Problem 1: An entity acquired a machine on January 6, 20x1. The machine was ready for its intended use as at the acquisition date; however, for some reason, the management decided not to use yet the machine. The machine was started to be used only on April 24, 20x2. Maintenance costs for oil and test run amounting to P8,000 were incurred during the period the machine was stocked. The entity prorates depreciation to the nearest full month. When should the entity start depreciating the machine and how should the entity account for the P8,000 costs, respectively?

a. January 1, 20x1; Expense

b. January 6, 20x1; Capitalize

c. April 24, 20x2; Expense

d. May 1, 20x2; Capitalize

Reference no: EM132903317

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