QUESTION 2 What is the purpose of making a provision for depreciation? To make a provision for repairs. to charge the cost of fixed assets against profitsl. To make cash available to replace fixed assets. To show the current market value of the fixed asset. QUESTION 3 Should the following item be capitalized as part of a long-lived asset or expensed? Expenditure for insurance for the first year a machine is in operation. Capitalized Expensed QUESTION 4 Should the following item be capitalized as part of a long-lived asset or expensed? Expenditure for extensive plumbing repairs to make a newly purchased building usable. Capitalized Expensed