Which of the following statements is true with respect to capitalizing asset costs?
A)All additional costs related to acquiring an asset should be expensed.
B)Land cannot be depreciated so it should just be expensed when acquired.
C)When costs are capitalized,the company gets the tax deduction immediately.
D)Some small expenses related to the purchase of an asset can be expensed for simplicity.

Question

Quizplus · Accepted Answer

Small expenses related to the purchase of an asset, such as shipping or installation costs, can be expensed for simplicity. This is known as the "materiality" concept, which allows companies to expense minor costs instead of going through the process of capitalization. However, major costs should still be capitalized and depreciated over the useful life of the asset.

Which of the Following Statements Is True with Respect to Capitalizing