Reference no: EM132964600
Problem 1. An improvement made to a machine increased its fair value and its production capacity by 25% without extending the machine's useful life. The cost of the improvement should be
a. expensed.
b. debited to accumulated depreciation.
c. capitalized in the machinery account.
d. allocated between accumulated depreciation and the machinery account.
Problem 2. Which of the following is a capital expenditure?
a. Payment of an account payable
b. Retirement of bonds payable
c. Payment of income taxes
d. Payment to overhaul an asset that extends its estimated useful life.
Problem 3. Which of the following is not a capital expenditure?
a. Repairs that maintain an asset in operating condition
b. An addition or extension
c. A betterment
d. A replacement