Question

Which of the following pertaining to ordinary repairs is false? Multiple Choice w a)They include activities such as cleaning, lubricating, and changing oil. b)They extend the useful life of an asset beyond its original estimate by several years. c)They are expenditures to keep an asset in good operating condition d)They include activities such as cleaning, lubricating, and changing oil. e)They extend the useful life of an asset beyond its original estimate by several years. f)They are expenditures to keep an asset in good operating condition. g)They are reported on the current period income statement. They are treated as expenses.

Answer 1

The false statements regarding ordinary repairs are those that claim they extend the life of an asset beyond its original estimate. Ordinary repairs are routine maintenance activities and are expensed on the income statement, not capitalized.

Step-by-step explanation:

The question regarding ordinary repairs involves identifying the incorrect statement among the provided options. Ordinary repairs are routine activities undertaken to maintain assets in good working condition, such as cleaning, lubricating, and changing oil. These tasks do not extend the useful life of an asset beyond its original estimate but rather ensure the asset continues to operate effectively within its existing estimated lifespan. Therefore, the false statements in the multiple-choice options are those that claim ordinary repairs extend the life of an asset beyond its original estimate. Ordinary repairs are expensed on the current period income statement and do not involve capitalization.

Understanding the accounting treatment of repairs is critical in financial reporting and asset management, and differentiating between ordinary and extraordinary repairs is key. Extraordinary repairs are those that notably improve the asset and extend its useful life, which would be capitalized rather than expensed.