Final answer:
False. Repairs and maintenance expenditures should be expensed in the period incurred, rather than capitalized. Capitalizing an expenditure means treating it as a long-term asset on the balance sheet.
Step-by-step explanation:
False. Repairs and maintenance expenditures should be expensed in the period incurred, rather than capitalized. When repairs and maintenance are incurred, they are considered ordinary expenses necessary to keep an asset in good working condition and are expensed on the income statement. Capitalizing an expenditure means treating it as a long-term asset on the balance sheet.
For example, if a company owns a building and incurs repair costs to fix a leaky roof, those costs would be recorded as an expense in the period they were incurred, reducing the company's net income. Capitalizing the repair costs in this situation would mean adding the costs to the value of the building on the balance sheet, which is incorrect.
It is important to distinguish between repairs and maintenance expenditures and capital expenditures, which are costs incurred to acquire, upgrade, or improve an asset. Capital expenditures are typically capitalized and recognized as long-term assets.