Answer:
Indicating whether the expenditure should be capitalized or expensed in the period incurred:
a. Improvement = capitalized
b. Replacement of a minor broken part on a machine = expensed
c. Expenditure that increases the useful life of an existing asset = capitalized.
Explanation:
The expectation of costs producing an economic benefit beyond the current year or within the normal course of an operating cycle determines whether to capitalize or expense the costs. When an item of expenditure is capitalized, it means that the expense recognition is delayed. When the cost is expensed, it is treated as an expense in the income statement, whereas a capitalized cost is taken to the balance sheet, with only the depreciation expense portion recognized as expense for the period.
Answer:
Land = $22,000
Building = $27,500
Machinery = $60,500
Explanation:
Use the appraised values to apportion the Purchase Price ($110,000) to the asset categories.
Total appraised value = $24,000 + $30,000 + $66,000 = $120,000
