If the Cost of Replacing the Engine on a Motor

question 60

Multiple Choice

If the cost of replacing the engine on a motor vehicle, which increased the vehicles' useful life by five years, was charged as an expense rather than being capitalised and added to the carrying amount of the vehicle, profit would be:

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

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Definitions:

Afferent

Referring to nerve fibers or pathways that carry sensory information from the body's periphery towards the central nervous system.

Cerebellum

A brain structure responsible for coordinating voluntary movements, balance, and fine-tuning motor activities.

Rostral

In anatomy, referring to a position toward the front end of the body in quadrupeds or the bottom of the head in humans.

Caudal

At or near the rear or the tail end of an organism.