The failure to capitalise a permanent asset, or the recording of an asset acquisition at the improper amount, affects the income statement:
A) for the current period.
B) forever.
C) until the firm disposes of the asset.
D) for the depreciable life of the asset.

Question

Quizplus · Accepted Answer

Failure to properly capitalise a permanent asset or recording an asset acquisition at an improper amount affects the income statement for the depreciable life of the asset. This is because the misstated initial value will result in an incorrect calculation of depreciation expense, which will continue to impact the income statement for as long as the asset is in use.

The Failure to Capitalise a Permanent Asset, or the Recording