A machine with an original estimated useful life of ten years is moved to another location in the factory after it had been in service for three years.The efficiency of the machine is increased for its remaining useful life.The reinstallation costs should be capitalized if the remaining useful life of the machine is Five Years Ten Years
A) No No
B) No Yes
C) Yes Yes
D) Yes No

Question

Quizplus · Accepted Answer

If the remaining useful life of the machine is five years or more, then the reinstallation costs should be capitalized as it extends the useful life of the machine. In this case, the remaining useful life is seven years (ten years original life minus three years in service), which is more than five years. Therefore, the reinstallation costs should be capitalized.

A Machine with an Original Estimated Useful Life of Ten