Chapter 10: Costs Subsequent to Acquisition Flashcards Preview

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Flashcards in Chapter 10: Costs Subsequent to Acquisition Deck (10)
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1
Q

When should you capitalize costs subsequent to acquisition?

A
  • Useful life increased
  • Quantity produced increased
  • Quality of produced ehanced
2
Q

Type of Expenditure

Addition

A

Treatment

Capitalize to asset account

3
Q

Type of Expenditure

Improvements and Replacements, if carrying value is known

A

Treatment

Remove old asset from the books (cost and accumulated depreciation), recognizing any gain or loss.

Capitalize to asset account

4
Q

Type of Expenditure

Improvements and Replacements, if carrying value is unknown and useful life is extended

A

Treatment

Debit accumulated depreciation for cost of improvement or replacement

5
Q

Type of Expenditure

Improvements and Replacement, carrying value is unknown and quality and quantity of productivity is increased

A

Treatment

Capitalize to asset account

6
Q

Type of Expenditure

Rearrangement and reinstallation, original installation cost known

A

Treatment

Remove cost and accumulated depreciation on old asset, recognizing any gain or loss.

Capitalize cost to asset account.

7
Q

Type of Expenditure

Rearrangment and reinstallation, original installation cost is unknown and reinstallation cost is:

material and benefits future periods

A

Treatment

Capitalize as an asset

8
Q

Type of Expenditure

Rearrangment and reinstallation, original installation cost is unknown and reinstallation cost is:

not material and future benefit is questionable

A

Treatment

Expense when incurred

9
Q

Type of Expenditure

Ordinary repairs

A

Treatment

Expense when incurred

10
Q

Type of Expenditure

Major repairs

A

Treatment

Addition, improvement or replacement