If an Expenditure Related to a Depreciable Asset Is Incorrectly

question 101

Multiple Choice

If an expenditure related to a depreciable asset is incorrectly treated as a capital expenditure,instead of as repairs and maintenance expense,which of the following statements is true?

• A)The current year's net income will be lower and future depreciation expense will be higher.
• B)The current year's net income will be higher and future depreciation expense will be lower.
• C)The current year's net income will be higher and future depreciation expense will be higher.
• D)The current year's net income will be lower and future depreciation expense will be lower.

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Definitions:

Minority Shareholders

Individuals or entities that own less than 50% of a company's shares, giving them limited control over corporate decisions.

Merger

The combination of two or more companies into a single corporate entity, often with the goal of increasing market share, reducing costs, or expanding into new segments.

Incremental Value

The additional value generated from a particular decision, investment, or action over its alternative.

Acquiring Firm

A company that purchases or takes control of another company through a merger, acquisition, or takeover.