17. Capital expenditures are not immediately expensed because these items: A)do not extend the life of an asset. B)return an asset to its prior condition. C)increase the asset's capacity. D) do all of the above.
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- Which of the following costs are NOT typically capitalized when acquiring a new piece of equipment? Calibration costs Interest on the loan necessary to acquire the equipment Freight charges to bring the equipment to its intended location Installation costsWhich of the following statements is/are FALSE: I. Following the acquisition of an item of property, plant and equipment, subsequent expenditure for this item that will extend the asset’s useful life and increase the asset’s capacity is capitalised. II. Investment property does not get depreciated, unless it is measured at cost. III. In the statement of comprehensive income, costs can be analysed according to function or nature. Costs analysed according to function are classified into the following categories: distribution & selling costs; administrative expenses; other operating expenses (or income). IV. Because of the prudence convention, inventories are expensed in the income statement as cost of goods sold when they are sold, and not when they are bought in by the business and paid for. V. A complete set of financial statements consists of the statement of financial position, the statement of comprehensive income, the statement of changes in equity and the statement of…Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers to the process of converting assets to expenses. B. Only the purchase price of the asset is capitalized. C. Capitalizing a cost means to record it as an asset. D. Capitalizing costs results in an immediate decrease in net income.
- What is a relevant cost? Explain why depreciation on an existing asset is always irrelevant.Which of the following costs are capitalized when purchasing a piece of equipment? a. The invoiced price of the equipment b. Sales taxes c. All installation costs related to the equipment d. All of the above(Multiple Choice Question) Amortizable Cost refers to 1. An asset's Net Book Value minus its Accumulated Amortization 2. The added cost of a capital asset after undergoing a capital improvement 3. The portion of the cost of the asset that will amortize over its useful life 4. The entire cost of a capital asset
- Which of the following is not a capital expenditure decision Select one: a. Improvement in fixed asset b. Purchase of goodwill c. None of the options d. Replacement in fixed asset e. R&D Expenditure8. Normal repair and maintenance of an asset is an example of what? a.Revenue expenditure b.Capital expenditure c.An expenditure that will be depreciated d.An expenditure that should be avoidedAll equipment costs will continue to be depreciated on a straight-line basis. For simplicity, ignore income taxes and the time value of money. Q.Assume that the capital expenditures to replace and upgrade the production equipment are as given in the original exercise, but that the production and sales quantity is not known. For what production and sales quantity would TechGuide (i) upgrade the equipment or (ii) replace the equipment?
- Which of the following costs is not typically capitalized as part of an asset’s cost? A) initial testing costs B) Purchase price of a service contract for routine maintenance costs C) Costs of insurance during the construction period D) Transportation costs while the asset was in transit E) Installation costsWhich of the following statements is (are) correct?a. Accumulated depreciation represents a cash fund beingaccumulated for the replacement of plant assets.b. The cost of a machine includes the cost of repairingdamage to the machine during the installation process.c. A company may use different depreciation methods inits financial statements and its income tax return.d. The use of an accelerated depreciation method causesan asset to wear out more quickly than does use of thestraight-line method.34. Which of the following is not one of the basic questions that must be answered before the amount of depreciation charge can be computed? A) What method of cost apportionment is best for this asset ? B) What product or service is the asset related to? C) What is the asset's useful life? D) What is the depreciation base to use for the asset?
