[Anonymous]

You are given a list of fixed assets their historical cost and their fair market value – then a bunch of invoices for repairs and maintenance expenses and the purchase of new parts related to some of these assets.

What clues should I be looking for in those invoices that would affect:

– capitalization of my equipment

How would this be shown in the general ledger?

[jimboace88]

The rule for repair and maintenance expense is that if it extends the life of the asset, you will reduce accumulated depreciation. If it improves the utility of the asset, you capitalize the cost of the repair/maintenance into the asset account. If it is a minor or routine repair, you treat it as a period expense.

Hope that helps!

FAR 07/27/11 - 87
AUD 10/01/11 - 85
BEC 11/15/11 - 87
REG 01/03/12 - 92

[Author]

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