If the Cost of a Major Service on a Motor

question 20

Multiple Choice

If the cost of a major service on a motor vehicle, which did not increased 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 understated and equity would be overstated.
• C) understated, fixed assets would be overstated and equity would be understated.
• D) understated, fixed assets would be overstated and equity would be overstated.

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Definitions:

Inter-leaf Friction

The resistance encountered between the leaves of a multi-leaf spring, contributing to the spring's damping characteristics.

Air Suspension

Air suspension is a type of vehicle suspension powered by an electric or engine-driven air pump or compressor, which inflates flexible bellows to adjust the car's level, reduce the effect of shock forces, and improve ride quality.

Regulated Pressure

The control or maintenance of pressure levels within specific limits in a system, achieved through the use of valves, regulators, or other controlling devices.

Axle Saddle

is a part of a vehicle's chassis that supports the axle, allowing it to bear the weight of the vehicle as well as enabling smooth movement and load distribution across the axle.