What type of asset is eligible for capitalizing renovation costs on a building?

The correct response highlights that only tangible assets are eligible for capitalizing renovation costs on a building. Tangible assets refer to physical items that have a finite useful life, such as buildings, machinery, and equipment. When it comes to renovation costs, these are typically improvements that extend the useful life of the building or enhance its value, thereby making it appropriate to capitalize these expenditures.

This means that instead of expensing the renovation costs, which would reduce net income in the period they are incurred, these costs are added to the value of the asset on the balance sheet. This approach aligns with accounting principles, particularly matching expenses with revenues, as the improvements contribute to future benefits of the asset.

Intangible assets, while they are important in accounting, do not apply in this case since renovation costs are related to a physical structure, not an intangible item like patents or copyrights. Natural resources tend to be treated separately under different accounting guidelines and would typically not include renovations which are more pertinent to physical buildings. Lastly, all types of assets combining tangible, intangible, and natural resources wouldn't typically apply to renovation costs related specifically to a building, reinforcing why tangible assets are the sole category relevant to this specific scenario.