If an expenditure related to a depreciable asset is incorrectly treated as a capital expenditure,instead of as repairs and maintenance expense,which of the following statements is true?
A)The current year's net income will be lower and future depreciation expense will be higher.
B)The current year's net income will be higher and future depreciation expense will be lower.
C)The current year's net income will be higher and future depreciation expense will be higher.
D)The current year's net income will be lower and future depreciation expense will be lower.

Question

Quizplus · Accepted Answer

The current year's net income will be higher because the expense is capitalized rather than expensed immediately, and future depreciation expense will be higher as the capitalized amount will be depreciated over time.

If an Expenditure Related to a Depreciable Asset Is Incorrectly