An improvement made to a machine increased its fair value and its production ca capacity by 25% without extending the machine's useful life. The cost of the improvement should be:___________ a) allocated between accumulated depreciation and the machine account. b) capitalized in the machine account c) expensed d) debited to accumulated depreciation.

To capitalized an equipment or asset in this case a machine, is to put the equipment on the balance sheet of expensing. When a piece of equipment is bought for $500 , rather than to report it as a $500 expense immediately, it will be listed in the balance sheet as a $500 asset.

The machine in this case the machine increased it production capacity by 25% without expanding its useful life, the cost of improvement is " capitalized in the machine account ".

sohail09753 sohail09753 · Answer 2 · 2021-12-21T13:48:26+01:00

The capitalization of the asset is the accounting method under which the value of asset is added by other costs such as expenses to be incurred over the useful life of the asset, rather then recording the expense each year.

The correct option is b) capitalized in the machine account.

In the given case the value of machine is recorded in the balance sheet of expensing. But when the additional value is added to the cost of the machine then it is added to the capitalized account for increasing the recorded value of the asset.

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