If the cost of a major service on a motor vehicle,which did not increased the vehicles' useful life was incorrectly capitalised and added to the carrying amount of the vehicle rather than being expensed:

Question

Quizplus · Accepted Answer

The cost should have been expensed, so expenses are understated. The incorrect capitalization increases fixed assets, overstating them, and equity is overstated because retained earnings are higher due to lower expenses.

If the Cost of a Major Service on a Motor