Which of the following is a typical problem that sometimes occurs in classifying an expenditure as capital or current?
A) What is a large expenditure to a small government may be a small expenditure to a large government.
B) Many items purchased by governments may be used for many years, but are not costly enough to make the accounting expense of including them in a capital budget worthwhile.
C) Sometimes an expenditure to repair a capital asset may replace the capital asset damaged, such as in a storm, but may not extend the life of that asset beyond what it would have lasted before the damage occurred.
D) All of these are correct.
E) None of these is correct.
Correct Answer:
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