If the Cost of a Major Service on a Motor

question 16

Multiple Choice

If the cost of a major service on a motor vehicle, which did not increase the vehicles' useful life was incorrectly capitalised and added to the carrying amount of the vehicle rather than being expensed, expenses would be:

• A) overstated, fixed assets would be overstated and equity would be understated.
• B) understated, fixed assets would be overstated and equity would be overstated.
• C) understated, fixed assets would be understated and equity would be overstated.
• D) understated, fixed assets would be overstated and equity would be understated.

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Definitions:

Bills Of Material

Detailed lists of raw materials, components, and instructions required to construct, manufacture, or repair a product or service.

MPS

Master Production Schedule, a plan for the production of individual final items that breaks down the aggregate plan.

Aggregate Plan

A planning strategy that outlines the overall production activities of a company over a certain period of time to meet forecasted demand.