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. (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.

Explanation:

For each of the following items, indicating whether the expenditure should be capitalised or expenses in the period incurred :

(a) Capitalised Improvement

(b) Expenses Replacement of a minor broken part on a machine

(c) Capitalised Expenditure that increases the useful life of an existing asset

(d) Capitalised Expenditure that increases the efficiency and effectiveness of a productive asset but does not increase its salvage value.

(e) Capitalised Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset’s salvage value.

(f) Capitalised Expenditure that increases the quality of the output of the productive asset.

(g) Capitalised Improvement to a machine that increased its fair market value and its production capacity by 30% without extending the machine’s useful life

(h) Expenses Ordinary repairs.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

fractionally backed paper money

fiat money

paper money

metallic money