Capitaliztion of the tooling supplies

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Auto Parts is one of the top three U.S. automobile manufactures. In the beginning of 2008, the company‘s CFO and controller decided that capitalization of the tooling supplies (The nature of the tooling supplies wear out quickly and needs frequent replacement) should be changed into the preferable method of accounting.The company changed its accounting policy accordingly and include the tooling supplies in other assets until the supplies are placed into service, at which time the company enters a journal entry to remove the assets and record the costs of the used supplies as an expense.

Question: Describe wether you agree that capitaliztion of the tooling supplies is the preferable method of accounting for Auto parts ,Inc.

Reference no: EM13143372

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