Chapter 10: Costs Subsequent to Acquisition Flashcards
When should you capitalize costs subsequent to acquisition?
- Useful life increased
- Quantity produced increased
- Quality of produced ehanced
Type of Expenditure
Addition
Treatment
Capitalize to asset account
Type of Expenditure
Improvements and Replacements, if carrying value is known
Treatment
Remove old asset from the books (cost and accumulated depreciation), recognizing any gain or loss.
Capitalize to asset account
Type of Expenditure
Improvements and Replacements, if carrying value is unknown and useful life is extended
Treatment
Debit accumulated depreciation for cost of improvement or replacement
Type of Expenditure
Improvements and Replacement, carrying value is unknown and quality and quantity of productivity is increased
Treatment
Capitalize to asset account
Type of Expenditure
Rearrangement and reinstallation, original installation cost known
Treatment
Remove cost and accumulated depreciation on old asset, recognizing any gain or loss.
Capitalize cost to asset account.
Type of Expenditure
Rearrangment and reinstallation, original installation cost is unknown and reinstallation cost is:
material and benefits future periods
Treatment
Capitalize as an asset
Type of Expenditure
Rearrangment and reinstallation, original installation cost is unknown and reinstallation cost is:
not material and future benefit is questionable
Treatment
Expense when incurred
Type of Expenditure
Ordinary repairs
Treatment
Expense when incurred
Type of Expenditure
Major repairs
Treatment
Addition, improvement or replacement
