An Improvement Made to an Existing Machine Increased Its Fair

question 34

Multiple Choice

An improvement made to an existing machine increased its fair market value and its production capacity by 30% and extended the machine's useful life by 5 years.How should the cost of the improvements be accounted for?

• A)Expensed
• B)Capitalized
• C)Recorded as a decrease to retained earnings.
• D)Recorded as a decrease in accumulated depreciation.

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Definitions:

Public Auctions

Sales events open to the public where goods or properties are sold to the highest bidder.

Excessive Bids

Bidding amounts that significantly exceed the estimated value of an item in auctions or tender processes.

Dominant Strategies

In game theory, strategies that are best for a player regardless of what the other players choose.

Credible Threat

A statement or action that is believable and carries the weight of possible enforcement, often used in negotiations or strategic situations.