Question

When deciding whether to capitalize or expense the costs incurred after purchasing a capital asset, which one of the following is NOT relevant in making the decision?

A) Will these costs reduce future operating costs?
B) Will these costs extend the useful life?
C) None of the other answers is correct - all are relevant in making the decision.
D) Will these costs improve output?

Answer 1

When deciding whether to capitalize or expense costs incurred after purchasing a capital asset, all of the options listed are relevant in making the decision.

Step-by-step explanation:

When deciding whether to capitalize or expense the costs incurred after purchasing a capital asset, there are several factors to consider. A) Will these costs reduce future operating costs? B) Will these costs extend the useful life? C) None of the other answers is correct - all are relevant in making the decision. D) Will these costs improve output?

All of the options listed are relevant in making the decision. A) If the costs will reduce future operating costs, it may be more beneficial to capitalize the costs to receive future benefits. B) If the costs will extend the useful life of the asset, it may be more appropriate to expense them. C) All factors should be considered in making the decision. D) If the costs will improve output, it may be beneficial to capitalize them.