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, expenses would be:

Question

Quizplus · Accepted Answer

The expenses would be understated because the cost was not expensed. Fixed assets would be overstated because the cost was incorrectly added to the asset's carrying amount. Equity would be overstated because net income would be higher due to lower expenses.

If the Cost of a Major Service on a Motor