An improvement made to a machine increased its fair market value and its production capacity by 25% without extending the machine's useful life.The cost of the improvement should be

Question

Quizplus · Accepted Answer

According to the concept of capitalization, any improvement that increases the fair market value and production capacity of a machine without extending its useful life should be capitalized in the machine account. This means that the cost of the improvement should be added to the machine's original cost and depreciated over the remaining useful life of the machine. Therefore, the correct option is to capitalize the improvement in the machine account.

An Improvement Made to a Machine Increased Its Fair Market