Applying the asset recognition criteria,which of the following accounting treatments are incorrect?
A) Transfer duties were included in the cost of acquisition of the photocopier.
B) Monthly servicing of the photocopier was capitalised.
C) Monthly servicing of the photocopier was expensed.
D) Replacement of a minor component part of the photocopier was expensed.

Question

Quizplus · Accepted Answer

Monthly servicing of the photocopier should be expensed as it is a routine maintenance cost, not an asset improvement or addition. Capitalizing such costs would not meet the asset recognition criteria as it does not enhance the future economic benefits of the asset beyond its originally assessed standard of performance.

Applying the Asset Recognition Criteria,which of the Following Accounting Treatments