Derby Co. incurred costs to modify its building and to rearrange its production line. As a result, an overall reduction in production costs is expected. However, the modifications did not increase the building’s market value, and the rearrangement did not extend the production line’s life.

Should the building modification costs and the production line rearrangement costs be capitalized?

Building modification costs Production line rearrangement costs

a. Yes No

b. Yes Yes

c. No No

d. No Yes