The Cost of a Major Overhaul of a Machine That

question 35

Multiple Choice

The cost of a major overhaul of a machine that extends its total useful life by four years would be:

• A) treated as an expense.
• B) added to the carrying amount of the asset causing future depreciation to be increased.
• C) charged to a separate asset account and depreciated over four years.
• D) cause an adjustment to prior years depreciation on the machine.

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Definitions:

Absolute Thresholds

The minimum stimulus energy needed to detect a particular stimulus 50% of the time.

General Tendency

A common or widespread inclination, pattern, or trend among people or phenomena.

Absolute Threshold

The minimum intensity of a stimulus that one can detect at least 50% of the time, which varies from one individual to another and for different senses.

Reliable Detection

The ability to consistently and accurately identify or recognize the presence of a specific condition, substance, or pattern.