Accountıng Iı Deneme Sınavı Sorusu #975720

A company removes  the engines of 5 of its vehicles to extend their useful life. Then, it changes the oil in the engines of another 5 vehicles. In this case, which of the following is true?


Both expenditures will be debited to an asset account.

Both expenditures will be recorded as period expenses. 

Both expenditures will be added to the cost of the asset.

The first expenditure  is added to the cost of the asset.

The second expenditure is debited to an asset account.


Yanıt Açıklaması:

The cost of the vehicles include the purchase price and other necessary expenditures made to bring them to their intended uses. If the expenditure made for vehicles extends the useful life of the vehicle and/ or increases the capacity, like modification or engine renewal, then these expenditures will be capitalized. But the regular maintenance expenditures such as oil change or minor engine repairs will be recorded as period expenses. The correct answer is D.

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