A Major Overhaul Made to a Machine Increased Its Fair

question 25

Multiple Choice

A major overhaul made to a machine increased its fair market value and its production capacity by 25% without extending the machine's useful life.The cost of the improvement should be

• A)expensed.
• B)debited to accumulated depreciation.
• C)capitalized in the machine account.
• D)allocated between accumulated depreciation and the machine account.

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Definitions:

Days In Inventory

Days in inventory is a financial metric that measures the average number of days a company holds inventory before selling it, indicating the efficiency of inventory management.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Dividend Yield

A metric indicating the annual dividends a firm distributes in relation to its share price.

Asset Turnover

A financial ratio indicating how efficiently a company uses its assets to generate revenue.