Which of the Following Must Be Capitalized by a Business

question 61

Multiple Choice

Which of the following must be capitalized by a business?

• A) Replacement of a windshield of a business truck which was broken in an accident.
• B) Repair of a roof of a building used in business.
• C) Amount paid for a covenant not to compete.
• D) Only b. and c. must be capitalized.
• E) a., b., and c. can be expensed rather than capitalized.

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Definitions:

Utility-Maximizing

A principle in economics wherein individuals or entities make choices that result in the highest level of satisfaction.

R&D Expenditures

Money spent on research and development activities to innovate and improve products or processes.

Expected Return

The anticipated profit or loss from an investment, considering both the probability and the impact of all possible outcomes.

Cost of Funds

The interest rate that financial institutions and other lenders charge each other for the use of money, as in loans or deposits.