Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

8. Long Lived Assets

Ordinary Repairs vs. Capital Improvements

Financial Accounting

8. Long Lived Assets

Ordinary Repairs vs. Capital Improvements

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Multiple Choice

Which of the following is an example of a capital improvement?

Replacing the roof of a building with a new, more durable roof

Changing the oil in company vehicles

Fixing a leaky faucet

Repainting the walls of an office

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Verified step by step guidance

Understand the concept of a capital improvement: A capital improvement is a significant upgrade or addition to a property that increases its value, extends its useful life, or adapts it to a new use. These improvements are typically long-term investments and are capitalized rather than expensed immediately.

Analyze the options provided in the problem: Each option represents a different type of activity related to property maintenance or improvement. Determine whether each activity qualifies as a capital improvement based on its impact on the property's value or useful life.

Evaluate the first option, 'Replacing the roof of a building with a new, more durable roof': This activity involves a significant upgrade to the property, increasing its durability and extending its useful life. It qualifies as a capital improvement.

Evaluate the second option, 'Changing the oil in company vehicles': This is a routine maintenance activity that does not increase the value or extend the useful life of the vehicles. It is not a capital improvement.

Evaluate the third and fourth options, 'Fixing a leaky faucet' and 'Repainting the walls of an office': Both are maintenance activities that restore the property to its original condition but do not significantly increase its value or extend its useful life. These are not capital improvements.