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C is corrent. Generally, a cost should be capitalized if it improves the efficiency of the asset or extends its useful life, and expensed if it merely maintains the asset at its current level. The renovation cost ($50,000) improves the production efficiency of the machines and therefore should be capitalized. However, the continuing, frequent, and low-cost repairs ($35,000) and the replacement of a broken gear ($5,000) merely maintain the assets at their current level, and therefore $40,000 should be charged to repairs and maintenance expense.
A is incorrect. Generally, a cost should be capitalized if it improves the efficiency of the asset or extends its useful life, and expensed if it merely maintains the asset at its current level. The renovation cost ($50,000) improves the production efficiency of the machines and therefore should be capitalized. However, the continuing, frequent, and low-cost repairs ($35,000) and the replacement of a broken gear ($5,000) merely maintain the assets at their current level, and therefore $40,000 should be charged to repairs and maintenance expense. 
A is incorrect. Generally, a cost should be capitalized if it improves the efficiency of the asset or extends its useful life, and expensed if it merely maintains the asset at its current level. The renovation cost ($50,000) improves the production efficiency of the machines and therefore should be capitalized. However, the continuing, frequent, and low-cost repairs ($35,000) and the replacement of a broken gear ($5,000) merely maintain the assets at their current level, and therefore $40,000 should be charged to repairs and maintenance expense. 
D is incorrect. Generally, a cost should be capitalized if it improves the efficiency of the asset or extends its useful life, and expensed if it merely maintains the asset at its current level. The renovation cost ($50,000) improves the production efficiency of the machines and therefore should be capitalized. However, the continuing, frequent, and low-cost repairs ($35,000) and the replacement of a broken gear ($5,000) merely maintain the assets at their current level, and therefore $40,000 should be charged to repairs and maintenance expense.