Asked by Adrian Batista on Jul 05, 2024
Verified
GAAP capitalizes expenditures to upgrade long-lived assets when the expenditure causes any of the following conditions except
A) the useful life of the asset is extended.
B) the capacity of the asset is increased.
C) the efficiency of the asset is increased.
D) there is an increase in the non-economic benefits associated with owning the asset (such as an increase in the appearance of the company's offices) .
Long-lived Assets
Assets expected to provide economic benefits over a period longer than one year, such as buildings, machinery, and equipment.
Capitalizes Expenditures
The process of recording a cost as an asset, rather than an expense, to be written off over the future period.
- Comprehend the accounting procedures for research and development (R&D) and software development expenditures.
Verified Answer
DS
Ditte SchultzJul 11, 2024
Final Answer :
D
Explanation :
GAAP does not consider non-economic benefits when deciding whether to capitalize expenditures. The focus is on whether the expenditure improves the useful life, capacity, or efficiency of the asset.
Learning Objectives
- Comprehend the accounting procedures for research and development (R&D) and software development expenditures.
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