An expenditure that increases an asset's capacity or extends its useful life is a(n):
A) capital expenditure.
B) expense.
C) addition.
D) improvement.

Question

Quizplus · Accepted Answer

A capital expenditure is an expense incurred to increase the capacity or extend the useful life of an asset. It is not considered an expense because it is expected to provide benefits beyond the current fiscal period. An addition refers to adding a new asset to a business, while an improvement refers to enhancing an asset's performance or increasing its value.

An Expenditure That Increases an Asset's Capacity or Extends Its