When an Expenditure Is Capitalized Instead of Being Recorded as a Revenue

question 67

Multiple Choice

When an expenditure is capitalized instead of being recorded as a revenue expenditure,what is the result?

• A) The total book value of plant assets reported on the balance sheet and the amount of net income reported during a period are both impacted.
• B) The total book value of plant assets reported on the balance sheet is impacted, but not the amount of net income reported during an accounting period.
• C) The amount of net income reported during the accounting period is impacted, but not the total book value of plant assets reported on the balance sheet.
• D) There is no impact on the book value of plant assets on the balance sheet or on the amount of income reported on the income statement.

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Definitions:

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