the question:
Which of the following statements is most likely true with respect to capitalizing
expenditure?
A. Capitalization decreases cash outflows from investing activities.
B. Capitalization increases cash inflows from operating activities.
C. Capitalization increases the total asset turnover of the company.
the solution's logic is that capitalized expenditures are investing cash outflows and not operating cash flows. so by the solutions capitalizing it would result in an increase in operating cash flows and decrease in investing cash flows (whaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaat?????).
can someone explain to me why this is the case?
thanks so much in advance!
the solution's logic is that capitalized expenditures are investing cash outflows and not operating cash flows. so by the solutions capitalizing it would result in an increase in operating cash flows and decrease in investing cash flows (whaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaat?????).
can someone explain to me why this is the case?
thanks so much in advance!