Multiple Choice $8-1$

Capitalization and Depreciation $($LO $8\mathrm{.}1)$

When a taxpayer capitalizes an expenditure:

a$.$ The taxpayer pays for it with debt or a liability.

b$.$ The amount is expensed immediately in accordance with ordinary and necessary deduction rules.

c$.$ The cost can be recovered only when the item is sold.

d$.$ The amount is generally placed on the balance sheet awaiting time or some future event for recognition as an expense.