MB-310 Manage Fixed Assets Practice Question
A company performs a major engine overhaul on a delivery truck that extends the truck's useful life by two years. The cost of the overhaul is $5,000. How should this transaction be recorded in the Fixed assets module?
⚠ Common exam trap
Candidates often select standard maintenance expenses or depreciation adjustments, failing to recognize that major overhauls extending useful life must be capitalized.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Post as an 'Acquisition adjustment' for $5,000.
Capitalizing subsequent costs is a key part of asset management when expenditures improve the asset's performance or extend its life. Recording this as an acquisition adjustment ensures the cost is added to the asset's basis and depreciated over the remaining life, reflecting the increased value and utility of the truck.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Post as a 'Depreciation adjustment' for $5,000.
Why it's wrong here
Depreciation adjustments are used to correct or change the amount of accumulated depreciation already recorded. They are not intended for recording new capital expenditures or major repairs that increase the asset's value. Using this type would incorrectly impact the depreciation reserve instead of the asset's cost.
- ✓
Post as an 'Acquisition adjustment' for $5,000.
Why this is correct
An acquisition adjustment is the correct transaction type for adding value to an existing asset. This increases the total acquisition cost in the subledger and the associated ledger account, allowing the $5,000 to be capitalized and depreciated over the truck's updated remaining useful life.
- ✗
Post as a 'Write-up adjustment' for $5,000.
Why it's wrong here
Write-up adjustments are typically used to increase the carrying value of an asset to its fair market value in specific accounting frameworks. While it increases value, it is not the standard way to record a physical improvement or repair cost that has been paid to a vendor.
- ✗
Expense the cost in a General journal.
Why it's wrong here
Expensing the cost would be incorrect because the overhaul extends the useful life of the asset, which qualifies it for capitalization under most accounting standards. Expensing would understate the company's assets and overstate expenses in the current period, leading to inaccurate financial reporting of the asset's value.
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Last reviewed September 2026 · checked against the official Microsoft exam blueprint
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