The Correct Statement Concerning Subsequent Costs Incurred in Relation to a Depreciable

question 41

Multiple Choice

The correct statement concerning subsequent costs incurred in relation to a depreciable asset after its original acquisition is which of the following?

• A) If the subsequent cost of replacing part of an item of equipment is added to the carrying amount of that asset then the carrying amount of the part that is replaced must be decommissioned.
• B) The painting of a building would normally be considered an improvement and capitalised.
• C) The replacement of the tyres on a motor would add to the expected life of the vehicle.
• D) Subsequent costs should nearly always be capitalised rather than charged to an expense account.

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