Finale Company's accounting manager decided to start capitalizing the company's routing repairs and maintenance expense, starting in 2006. What effect will this change have on the company's 2007 income and assets respectively?

Question

Quizplus · Accepted Answer

Capitalizing expenses that should be expensed will overstate both income and assets, as expenses are not recognized immediately, and assets are increased by the capitalized amount.

Finale Company's Accounting Manager Decided to Start Capitalizing the Company's