Mento, Inc. spent $4,500,000 during 2014 to repair and update its plant assets. This consisted of $1,800,000 to paint the building, $345,000 to place worn-out gears on motors, $960,000 to install special shelving that will increase operating efficiency in the plant, and $1,395,000 on new machinery. What amount of these costs would appear as assets on Mento, Inc.'s December 31, 2014 statement of financial position?

Question

Quizplus · Accepted Answer

The costs that would appear as assets on Mento, Inc.'s December 31, 2014 statement of financial position are the costs that increased the value of the plant assets. These costs include the $960,000 to install special shelving and the $1,395,000 on new machinery. The other costs, such as the $1,800,000 to paint the building and the $345,000 to place worn-out gears on motors, are considered maintenance costs and would be expensed in the period in which they were incurred.