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linda_us
linda_us, Master's Degree
Category: Business and Finance Homework
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Construction of a qualifying asset is started on April 1 and

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Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is?
Submitted: 6 years ago.
Category: Business and Finance Homework
Expert:  linda_us replied 6 years ago.
Hi Customer

The Answer is 8/12

Regards

Linda
Customer: replied 6 years ago.
Linda,I kind of did my homework but I need to recheck with you.Thank you for this answer.Can I count on you for the next 9?
Expert:  linda_us replied 6 years ago.
Ya Sure...Just put "FOR LINDA" in front of your post. I am online and will reply ASAP.
Customer: replied 6 years ago.
alright:for Linda:

An expenditure made in connection with a machine being used by an enterprise should be

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a. expensed immediately if it merely extends the useful life but does not improve the quality.
b. expensed immediately if it merely improves the quality but does not extend the useful life.
c. capitalized if it maintains the machine in normal operating condition.
d. capitalized if it increases the quantity of units produced by the machine.
Expert:  linda_us replied 6 years ago.


The answer is "b. expensed immediately if it merely improves the quality but does not extend the useful life"

Please note that I get credit for my work only when you click accept.

Regards

Linda
linda_us and other Business and Finance Homework Specialists are ready to help you
Customer: replied 6 years ago.
ok,I will keep in mind what you told me.I didn't know.But why is b and not d?I thought in order ro capitalize costs one of the 3 conditions should be present:
1)the usefuul life of the asset must be increased
2)the quantity of units produced from the asset increased
3)the quality of the units produced must be enhanced.
Expert:  linda_us replied 6 years ago.

You are correct, how I looked at the question initially was that quantity produced per day/per hour increased but not the total quantity (as question is silent about that) but now if I put question in front of condition option D look more closer and correct.

So we should go with option "D"

d. capitalized if it increases the quantity of units produced by the machine.
Expert:  linda_us replied 6 years ago.

Thanks for the acceptance Customer. I would consider this as acceptances for your Original question don’t accept again for the second one as I corrected the solution (after your inputs).