Once equipment has been installed and placed in operation,subsequent expenditures relating to this equipmentare frequently thought of as repairs or general maintenanceand, hence, chargeable to operations in the periodin which the expenditure is made. Actually, determinationof whether such an expenditure should be chargedto operations or capitalized involves a much more carefulanalysis of the character of the expenditure. What arethe factors that should be considered in making such adecision? Discuss fully.
Once equipment has been installed and placed in operation,subsequent expenditures relating to this equipmentare frequently thought of as repairs or general maintenanceand, hence, chargeable to operations in the periodin which the expenditure is made. Actually, determinationof whether such an expenditure should be chargedto operations or capitalized involves a much more carefulanalysis of the character of the expenditure. What arethe factors that should be considered in making such adecision? Discuss fully.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Once equipment has been installed and placed in operation,
subsequent expenditures relating to this equipment
are frequently thought of as repairs or general maintenance
and, hence, chargeable to operations in the period
in which the expenditure is made. Actually, determination
of whether such an expenditure should be charged
to operations or capitalized involves a much more careful
analysis of the character of the expenditure. What are
the factors that should be considered in making such a
decision? Discuss fully.
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