Question

Which of the following statements concerning repair and maintenance expenditures is true?

A. Routine repair costs and preventive maintenance expenditures are capitalized as assets in the period in which they are incurred.
B. All repair and maintenance expenditures are accounted for as expenses in the year in which they are incurred.
C. Maintenance expenditures that extend the useful life and ∕or increase the salvage value of an asset should be capitalized and depreciated over the asset's remaining useful life.
D.For income tax purposes, most taxpayers would prefer to capitalize an expenditure and depreciate the asset over time rather than expensing the expenditure and deducting the entire amount in the year it is incurred.

Answer 1

Maintenance expenditures that extend the useful life and/or increase the salvage value of an asset should be capitalized and depreciated over the asset's remaining useful life.

Step-by-step explanation:

The statement that is true concerning repair and maintenance expenditures is:

C. Maintenance expenditures that extend the useful life and/or increase the salvage value of an asset should be capitalized and depreciated over the asset's remaining useful life.

Repair costs and preventive maintenance expenditures are generally expensed in the year in which they are incurred, not capitalized as assets. However, maintenance expenditures that lead to an increase in the asset's useful life or salvage value can be capitalized and depreciated over the remaining life of the asset. This is done to allocate the cost of the maintenance over its useful life, rather than expensing it all at once.