On September 10, 2010, Jenks 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, Jenks 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

According to the information given, the renovation resulted in significantly increased productivity. This suggests that the renovation cost meets the criteria of improving the efficiency or productivity of the asset, which qualifies for capitalization. Therefore, the total amount of $85,000 (attachment cost of $18,000 + renovation cost of $67,000) should be capitalized.