- CFA Exams
- CFA Exam: Level I 2021
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 22. Understanding Balance Sheets
- Subject 1. Components and Format of the Balance Sheet
CFA Practice Question
Expenditures capitalized as noncurrent assets generally include those expenditures that are ______.
B. for items that have a physical life of more than a year, regardless of their cost
C. material and that have an economic benefit to the entity only in the current year
D. material and that have an economic benefit to the entity that extends beyond the current year
E. immaterial
A. made for normal repairs to maintain the usefulness of the asset over a number of years
B. for items that have a physical life of more than a year, regardless of their cost
C. material and that have an economic benefit to the entity only in the current year
D. material and that have an economic benefit to the entity that extends beyond the current year
E. immaterial
Correct Answer: D
User Contributed Comments 5
| User | Comment |
|---|---|
| aestus | 'Usefuless of an asset' is not the same as the 'physical life of an asset'. Hence D and not B. |
| Khadria | "D" includes "B" |
| Jolen | thanks aestus...nice distinction. |
| jasonkwk | what does capitalize means? |
| To-be-CFA | @Jasonkwk: Capitalize means stating the cost on the Asset side of the Balance Sheet. |