The Correct Statement Concerning Subsequent Costs Incurred in Relation to a Depreciable

question 41

Multiple Choice

The correct statement concerning subsequent costs incurred in relation to a depreciable asset after its original acquisition is which of the following?

• A) If the subsequent cost of replacing part of an item of equipment is added to the carrying amount of that asset then the carrying amount of the part that is replaced must be decommissioned.
• B) The painting of a building would normally be considered an improvement and capitalised.
• C) The replacement of the tyres on a motor would add to the expected life of the vehicle.
• D) Subsequent costs should nearly always be capitalised rather than charged to an expense account.

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Definitions:

Mystical

Pertaining to or involving a spiritual or esoteric experience that goes beyond the ordinary understanding or explanation.

Psychoanalytic

Refers to a psychological theory and therapy that emphasizes the role of unconscious factors in personality and behavior.

Medical

Pertains to the science of diagnosing, treating, and preventing illnesses and injuries.

Cognitive Distortion

Patterns of thinking that are biased, irrational, or inaccurate, often leading to misinterpretation of reality and negatively impacting mental health.