Consider each of the items below. Place the proper letter in the blank space provided to indicate the nature of the account or accounts to be debited when recording each transaction using the preferred accounting treatment. Prepayments should be recorded in balance sheet accounts. Disregard income tax considerations unless instructed otherwise.
-Machinery which had originally cost $130,000 was rearranged at a cost of $450, including installation, in order to improve production.

Question

Quizplus · Accepted Answer

The cost of rearranging machinery to improve production is capitalized as an asset because it extends the useful life or enhances the productivity of the machinery. This cost is added to the machinery's book value on the balance sheet.

Consider Each of the Items Below