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.
(i) _________ Addition.
(j) _________ Interest on borrowing necessary to finance a major overhaul of machinery. The overhaul extended the life of the machinery.