Pat's Pets recently paid to have the engine in its delivery van overhauled.The estimated useful life of the van was originally estimated to be 4 years.The overhaul is expected to extend the useful life of the van to 10 years.The overhaul is regarded as a(n):
A)revenue expenditure.
B)capital expenditure.
C)equity expenditure.
D)matching expenditure.

Question

Quizplus · Accepted Answer

The overhaul expense is a capital expenditure as it is an investment that extends the useful life of the van beyond its original estimate. This expense can be capitalized and depreciated over the new useful life of the van.

Pat's Pets Recently Paid to Have the Engine in Its