Questions: Which of the following subsequent expenditures would be capitalized? Multiple Choice Ordinary repairs and routine maintenance Routine maintenance Costs that increase the service life of an asset Ordinary repairs

The answer is: Costs that increase the service life of an asset.

Explanation for each option:

1. Ordinary repairs and routine maintenance: These are typically expensed as incurred because they do not extend the life of the asset or improve its efficiency beyond its original condition.

2. Routine maintenance: Similar to ordinary repairs, routine maintenance is expensed as it is performed to keep the asset in its normal operating condition.

3. Costs that increase the service life of an asset: These expenditures are capitalized because they provide future economic benefits by extending the useful life of the asset, improving its efficiency, or increasing its capacity.

4. Ordinary repairs: These are also expensed as incurred because they are necessary to maintain the asset in its current condition and do not provide additional future economic benefits.

Summary: Expenditures that increase the service life of an asset are capitalized because they enhance the future economic benefits of the asset. Ordinary repairs and routine maintenance are expensed as they do not extend the asset's useful life or improve its efficiency.