Which Statement Is True About a Company's Choice of Capitalization

question 15

Multiple Choice

Which statement is true about a company's choice of capitalization policy?

• A) All assets with a useful life of more than one year must be capitalized.
• B) The company's policy must meet the minimum capitalization amounts established by GAAP.
• C) The company's policy is determined relative to materiality and the cost of maintaining asset records.
• D) The company may elect to capitalize operating expenses which exceed the minimum threshold for asset capitalization.

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Definitions:

Express Agent Authority

Is explicitly granted by a principal to an agent to undertake actions on the principal’s behalf.

Special Type

Implies a particular category distinguished by a specific or unique characteristic within a broader classification.

Agency Relationship

A legal and fiduciary bond between two parties where one, the agent, is authorized to act on behalf and represent the interests of the other, the principal.

Terminated

The condition of being brought to an end or concluded, often referring to contracts, employment, or agreements.