The Decision Whether to Expense or Capitalize Expenditures for Plant

question 53

Multiple Choice

The decision whether to expense or capitalize expenditures for plant assets depends on many factors.Which of the following is NOT a factor for a company choosing to expense or capitalize an expenditure?

• A)The decision of whether to expense or capitalize an expenditure is based on management's judgment.
• B)The decision of whether to expense or capitalize an expenditure is influenced by cost-benefit and materiality tests.
• C)The decision of whether to expense or capitalize an expenditure is not based on management's judgment since U.S.GAAP provides clear rules on specific types of assets.
• D)The decision of whether to expense or capitalize an expenditure has the potential to cause ethical issues for companies.
• E)The decision of whether to expense or capitalize an expenditure is influenced by the principle of conservatism causing accountants to expense an expenditure as opposed to capitalize it when faced with contradictory evidence.

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Definitions:

Mood Disorder

A category of mental disorders involving persistent disturbances in a person’s mood or emotional state.

Psychotic Features

Aspects of an individual's mental state that may include delusions, hallucinations, or thought disorders, often associated with certain psychiatric conditions.

Manic Episode

A period of abnormally elevated, expansive, or irritable mood and increased energy or activity lasting at least one week, associated with bipolar disorder.

Autism Spectrum

A range of neurodevelopmental conditions characterized by challenges with social skills, repetitive behaviors, speech and nonverbal communication, each person affected can have symptoms from mild to severe.