A major expenditure made to equipment that extends its useful life beyond the original estimate is journalized by:

Question

Quizplus · Accepted Answer

The expenditure is extending the useful life of the equipment, so it should be capitalized by debiting the Equipment account. Choosing A or D (crediting Depreciation Expense or debiting Depreciation Expense) would imply that the useful life has decreased, which is not the case. Choosing B (debiting Repair Expense) would be incorrect because the expenditure is not for repairs, but for an upgrade or improvement to the equipment.

A Major Expenditure Made to Equipment That Extends Its Useful