which of the following costs should not be capitalized? A machine operator’s wag

Question

which of the following costs should not be capitalized?

A machine operator’s wages during a period of testing and adjusting new machinery.

B maintenance of an unused standby plant.

C major reconditioning of deliver truck

D fencing the plant parking lot.

SFAS No.5, accounting for contingencies, defines a loss contingency and states the requirements for requirements for recognition as charge to income and credit to an accrued liability. An accrual could not be made as a result of:

A pending litigation or threats of expropriation.

B repurchase commitments

C general business risks

D guarantees of indebtedness incurred by others.

The most appropriate reason for changes to accumulated depreciation is that

A a depreciable asset has been recorded at current cost

B retained earnings have been appropriated for possible loss on retirement

C major repairs have lengthened the life of an asset

D depreciation for periods was understated

Explanation / Answer

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