Sioux co. replaced the roof on its existing building, therefore increasing the building's life by 10 years. the cost of the roof is considered a (n) :

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Joel Cherry

Mathematics

1 June, 07:25

Sioux co. replaced the roof on its existing building, therefore increasing the building's life by 10 years. the cost of the roof is considered a (n) :

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Daniella Curry · Answer 1

capitalized cost

Step-by-step explanation:

A capitalized cost is an expense that can be added to the original cost of a property (or another fixed asset) because it extends the useful life of the property or asset. That cost will then be depreciated over the remaining useful life of the asset or property.

E. g. a building has a carrying book value of $500,000 and a remaining useful life of 20 years. $50,000 are spent fixing the roof of the building and the structure. These construction cures will extend the buildings useful life by 5 years. So now the carrying value of the building is $550,000 and the depreciation expense per year = $22,000 for the next 25 years (instead of ($25,000 for the next 20 years).