Allen Company paid cash to prolong the life of one of its assets. Which of the following choices accurately reflects how this event would affect Allen's financial statements?
A)Option A
B)Option B
C)Option C
D)Option D

Question

Allen Company paid cash to prolong the life of one of its assets. Which of the following choices accurately reflects how this event would affect Allen's financial statements? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The expenditure decreases assets (cash) and increases assets (decreases accumulated depreciation). It does not affect the income statement, and is reported as a cash outflow for investing activities.

Allen Company Paid Cash to Prolong the Life of One