A major addition to equipment should have been capitalized in the year 2021 but was incorrectly expensed. What would the impact on asset value and income be?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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A major addition to equipment should have been capitalized in the year 2021 but was incorrectly expensed. What would the impact on asset value and income be?

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*** IF THE ADDITIONS MADE TO ASSET WHICH  BRINGS THE PROBABLE  ENHANCED FUTURE CASH INFLOWS FROM THE ASSET THEN SUCH COST OF ADDITION CAN BE CAPITALIZED TO ASSET.

 

*** AS THE ADDITION IS NOT CAPITALIZED SO  THE ASSET VALUE WILL BE SHOWN LESS, AND BALANCE OF TOTAL ASSETS IN THE BALANCE SHEET WILL BE MISSTATED.

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