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 amortized 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

Some small expenses related to the purchase of an asset can be expensed for simplicity. However, larger costs related to acquiring and improving an asset should be capitalized and depreciated over the asset's useful life. Land cannot be depreciated or amortized, but any additional costs related to the land (such as site preparation) can be capitalized. Capitalizing asset costs does not result in an immediate tax deduction, but rather provides tax benefits over the asset's useful life through depreciation or amortization deductions.

Which of the Following Statements Is True with Respect to Capitalizing