7.

Plant assets often require expenditures subsequent to acquisition. It is important that they be accounted for properly. Any errors will affect both the balance sheets and income statements for a number of years. For each of the following items, indicate whether the expenditure should be capitalized or expensed in the period incurred. Items (a) Improvement. Expensed Capitalized (b) Replacement of a minor broken part on a machine. (c) Expenditure that increases the useful life of an existing asset. (d) Expenditure that increases the efficiency and effectiveness of a productive asset but does not increase its salvage value. (e) Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset's salvage value. (f) Expenditure that increases the quality of the output of the productive asset. (g) Improvement to a machine that increased its fair market value and its production capacity by 30% without extending the machine's useful life. (h) Ordinary repairs