Question

Signify the item that most accurately and completely describes subsequent expenditures (after acquisition) that can be...

Signify the item that most accurately and completely describes subsequent expenditures (after acquisition) that can be charged to a plant asset account.

a. All expenditures related to the asset

b. All normal and reasonable expenditures related to the asset

c. Revenue expenditures

d. Expenditures that increase useful life OR productivity

e. Expenditures that increase useful life AND productivity

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Answer #1

Answer:

d. Expenditures that increase useful life OR productivity

Explanation:

After installation of the plant, if the costs are incurred which result in either an increase in the useful life of the asset OR increase in productivity, such expenditure should be capitalized, or in simple words, added to the asset cost.

Productivity is increased when the quantity of the units produced from that asset are increased, or the quality of units produced from that asset is enhanced.

In case of any doubt, please comment.

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