Practice prompt · Q:tangible-asset-acquisition-capitalization-and-resources/subsequent-cost-001

Route repair, replacement, and component derecognition

Use work order evidence to distinguish routine maintenance from a supported component replacement.

Updated Sep 10, 2026 Review due Nov 8, 2026

Practice

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A work-order packet contains recurring lubrication and replacement of an identified motor with a supported remaining carrying amount. Which route is best?

Choose the best answer. A Expense the routine lubrication; evaluate capitalization of the new motor; remove the supported carrying amount of the replaced motor; update estimates prospectively as needed. B Capitalize both invoices because they exceed the company's review threshold. C Expense both invoices because the production line already existed. D Capitalize the new motor and keep the old motor in gross assets because no cash was received for it.

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Answer: A

Choice A separates ordinary maintenance from the replacement and keeps capitalization, derecognition, and estimate updating visible.