An Expenditure Made in Connection with a Machine Being Used

question 125

Multiple Choice

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

• 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.

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Definitions:

Federal Income Taxes

Charges imposed by the national government on the yearly income of persons, businesses, trusts, and other legal bodies.

Payroll Tax Expense

Taxes that employers are required to pay on behalf of their employees, including contributions to social security, healthcare, and unemployment insurance.

Federal Income Taxes

Taxes imposed by the government on the income earned by individuals and entities, varying according to income level and filing status.

Current Liabilities

Financial obligations of a company due within one year, including accounts payable, short-term loans, and other short-term debts.