Final answer:
The statement is false; costs for improvements to a plant asset that boost efficiency, capacity, or lifespan are not expensed but capitalized and depreciated over time. These investments are part of a company's long-term strategy to ensure economic growth.
Step-by-step explanation:
The statement that additions and improvements to a plant asset that increase the asset's operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred is false. Instead, these costs are capitalized, meaning they are added to the value of the asset on the balance sheet and depreciated over the useful life of the improvement. Capitalization is applied to expenditures that provide benefits extending beyond the current period and increase the value of the asset. Such investments are critical for a firm's growth and are part of broader investment strategies involving financial assets.
Examples of such capital expenditures include purchasing a new machine with a lifespan of 10 years or constructing a new plant that will last for 30 years. Companies raise the necessary financial capital through various means such as early-stage investment, reinvesting profits, borrowing, or selling stock. The decision to capitalize these costs reflects an investment strategy that anticipates future profits, which is essential for sustaining long-term economic growth.