Plant assets often require expenditures subsequent to acquisition. It is important that they be accounted for properly. Any errors will affect both the balance sheets and income statements for a number of years.InstructionsFor each of the following items, indicate whether the expenditure should be capitalized (C) or expensed (E) in the period incurred.a.__________Improvement.b.__________Replacement of a minor broken part on a machine.c.__________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.e.__________Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset’s salvage value.f.__________Expenditure that increases the quality of the output of the productive asset.g.__________Improvement to a machine that increased its fair market value and its production capacity by 30% without extending the machine’s useful life.h.__________Ordinary repairs.

Plant assets: Plant assets refer to the fixed assets, having a useful life of more than a year…

Answered: Plant assets often require expenditures…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.1KTQ

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Instructions

For each of the following items, indicate whether the expenditure should be capitalized (C) or expensed (E) in the period incurred.

a.	__________	Improvement.
b.	__________	Replacement of a minor broken part on a machine.
c.	__________	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.
e.	__________	Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset’s salvage value.
f.	__________	Expenditure that increases the quality of the output of the productive asset.
g.	__________	Improvement to a machine that increased its fair market value and its production capacity by 30% without extending the machine’s useful life.
h.	__________	Ordinary repairs.

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