Title: GAAP Accounting for Capital Improvements | Bizfluent
Headings: GAAP Accounting for Capital Improvements
GAAP Accounting for Capital Improvements
TL;DR (Too Long; Didn't Read)
Fixed Assets and Useful Life
Repair vs. Capital Improvement in GAAP
Expense and Improvement Bookkeeping
Improvements to Land
Depreciating Capital Improvements
Setting the Cap Limit
Case by Case
Must I Use GAAP?
Capital Improvements and Taxes
Section 179
Bonus Depreciation
Tax Depreciation of Improvements

Content: GAAP Accounting for Capital Improvements | Bizfluent
GAAP Accounting for Capital Improvements
By: Fraser Sherman
Reviewed by: Jayne Thompson, LL.B., LL.M.
Updated December 16, 2019
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Repairing business assets usually makes for simple accounting. You spend $50 repairing your copier; you record a $50 repair expense. Repairs and upgrades big enough to qualify as capital improvements are a different story. Under Generally Accepted Accounting Principles (GAAP), you treat these improvements as added assets and depreciate them over time. TL;DR (Too Long; Didn't Read)
Under GAAP, you record repairs and maintenance as an expense. The cost of significant improvements, such as a new engine in a truck or installing a more efficient HVAC, must be depreciated over time.