Which of the following must be capitalized by a business?
A) Replacement of a windshield of a business truck which was broken in an accident.
B) Repair of a roof of a building used in business.
C) Amount paid for a covenant not to compete.
D) Only b. and c. must be capitalized.
E) a., b., and c. can be expensed rather than capitalized.

Question

Quizplus · Accepted Answer

The amount paid for a covenant not to compete is a capital expenditure because it provides a future economic benefit over its term. The replacement of a windshield and repair of a roof are typically considered repairs and maintenance, which are expensed.

Which of the Following Must Be Capitalized by a Business