Firms often incur costs to maintain, repair, and improve their tangible assets.U.S.GAAP and IFRS require firms to treat expenditures for _____ as _____ as incurred but _____ treat as _____.

Question

Quizplus · Accepted Answer

Under both U.S. GAAP and IFRS, costs for maintenance and repairs are treated as expenses of the period in which they are incurred because they do not enhance the asset's future economic benefits beyond its original condition. Expenditures for improvements, however, are capitalized as assets because they increase the asset's value or extend its useful life.

Firms Often Incur Costs to Maintain, Repair, and Improve Their