Question

When subsequent expenditure on intangible assets are incurred, the costs are: Select one: a. immediately expensed,...

When subsequent expenditure on intangible assets are incurred, the costs are: Select one: a. immediately expensed, rather than being capitalised. b. transferred to a revaluation reserve account. c. capitalised as part of the cost of the asset. d. debited to the retained earnings account.

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Answer #1

ANSWER:-

Option c is correct. i.e.capitalised as part of the cost of the asset

Explanation:-

When subsequent expenditure on intangible assets are incurred, the costs should be capitalized as a part of the cost of the asset when,

there is probability that expenditure will generate future economic benefit and the expenditure can be measured reliably.

When this criteria is fulfilled then only we should capitalise that subsequent expenditure. Assuming this criteria is fulfilled, so it is capitalized.

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