How should $45,000 spent to obtain greater productive efficiency for a machine with a carrying value of $80,000 be accounted for?

Question

Quizplus · Accepted Answer

The cost of improving the machine should be capitalized as it increases the future benefit that can be generated from the machine. This cost should be depreciated over the machine's remaining useful life, which will result in increased depreciation expense in the current and subsequent periods.

How Should $45,000 Spent to Obtain Greater Productive Efficiency for a Machine