Ask Question
25 June, 23:05

The original capacity of the equipment is 10,000 units per year. After paying $2,500 to replace an important part, the company increases the capacity of equipment to 12,000 units per year. How does the company deal with the $2,500 expenditures

+4
Answers (1)
  1. 26 June, 02:12
    0
    The firm must increase the value of the equipment account by $2,500.

    Explanation:

    In this case, the repair expense must capitalize the asset account and not be considered an expense, instead it should be considered an additional investment. The $2,500 should be depreciated along with the normal depreciation of the equipment since it increased the productive capacity significantly.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The original capacity of the equipment is 10,000 units per year. After paying $2,500 to replace an important part, the company increases ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers