A company spends \$400 on cleaning a machine and \$2,500 on installing new software to improve its functionality. How should these transactions be categorized?

• A. Both transactions are ordinary repairs.
• B. Both transactions are capital improvements.
• C. Cleaning is a capital improvement; installing new software is an ordinary repair.
• D. Cleaning is an ordinary repair; installing new software is a capital improvement.

Answer: (D)