Torres Co. has installed a piece of machinery for a total of $45,000. In its third month of operation, repairs of $900 had to be made on the machine. This $900 would be:
A)added to the cost of the machinery.
B)treated as a repairs and maintenance expense.
C)capitalized in an asset account.
D)deducted from cost of the machinery.

Question

Quizplus · Accepted Answer

The $900 cost for repairs and maintenance should be treated as an expense rather than capitalized as it does not enhance the usefulness or extend the life of the machinery. This expense is a normal cost incidental to the use of the machinery and should be recognized as such in the repairs and maintenance account.

Torres Co Has Installed a Piece of Machinery for a Total