Plant assets often require expenditures subsequent to acquisition. It is important that they be accounted for properly. Any errors will affect both the balance sheets and income statements for a number of years.

Instructions
For each of the following items, indicate whether the expenditure should be capitalized (C) or expensed (E) in the period incurred.

  (a) __________ Improvement.
  (b) __________ Replacement of a minor broken part on a machine.
  (c) __________ Expenditure that increases the useful life of an existing asset.
  (d) __________ Expenditure that increases the efficiency and effectiveness of a productive asset but does not increase its salvage value.
  (e) __________ Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset’s salvage value.
  (f) __________ Expenditure that increases the quality of the output of the productive asset.
  (g) __________ Improvement to a machine that increased its fair market value and its production capacity by 30% without extending the machine’s useful life.
  (h) __________ Ordinary repairs.