a-company-spends-400-on-cleaning-a-machine-and-2500-on-installing-new-software-t

Question

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?

Accepted Answer

Cleaning is an ordinary repair; installing new software is a capital improvement.

Answer

Both transactions are ordinary repairs.

Answer

Both transactions are capital improvements.

Answer

Cleaning is a capital improvement; installing new software is an ordinary repair.

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?