On September 10, 2010, Linx Co.incurred the following costs for one of its printing presses: Neither the attachment nor the renovation increased the estimated useful life of the press.However, the renovation resulted in significantly increased productivity.What amount of the costs should be capitalized?

Question

On September 10, 2010, Linx Co.incurred the following costs for one of its printing presses:  Neither the attachment nor the renovation increased the estimated useful life of the press.However, the renovation resulted in significantly increased productivity.What amount of the costs should be capitalized?

Quizplus · Accepted Answer

Both the attachment and the renovation costs should be capitalized since they meet the criteria for capitalization. The total cost of the attachment and renovation is $360,000 + $144,000 = $504,000. However, since the attachment did not increase the useful life, only the renovation cost of $144,000 should be capitalized.