A company has incurred some routine maintenance costs.If they decide to capitalize these costs instead of expensing them, what would be the effect on CFO and cash flow from investing activities (CFI) in that period? $\begin{array}{ll}
&\text { CFO } & \text { CFI } \
A.&\text { increase } & \text { increase } \
B.&\text { increase } & \text { decrease } \
C.&\text { decrease } & \text { increase } \
D.&\text { decrease } & \text { decrease }
\end{array}$

Question

Quizplus · Accepted Answer

Capitalizing routine maintenance costs instead of expensing them increases CFO because the expense is not deducted from operating income. It decreases CFI because the capitalized amount is considered an investment in the asset, thus increasing cash outflows in the investing activities section.

A Company Has Incurred Some Routine Maintenance Costs A)Option a B)Option B C)Option C D)Option D

A Company Has Incurred Some Routine Maintenance Costs A)Option a
B)Option B
C)Option C
D)Option D