Title: What Is a Capital Improvement Asset on a Balance Sheet? | Bizfluent
Headings: What Is a Capital Improvement Asset on a Balance Sheet?
What Is a Capital Improvement Asset on a Balance Sheet?
Definition
Bookkeeping
Reporting
Financial Implications

Content: But when losses start crippling strategic initiatives and reducing money in corporate vaults, senior executives may think about improving fixed assets. Capital improvement assets, the result of these operational modifications, are integral to a balance sheet. Definition
A capital improvement asset is money a company doled out to repair, improve or increase the operational efficiency of a capital asset, also known as a fixed resource or tangible asset. Examples include commercial establishments, highways, residential dwellings, machinery and heavy-duty equipment. The business must spend a substantial amount and the improvements must be significant before the transaction can qualify as a capital improvement asset. Under accounting guidelines, an improvement is a capital betterment asset if it extends the estimated operational life of the asset, increases its capacity or efficiency, and the improvement increases the quality of outputs or reduces previously assessed operating expenses. Bookkeeping
To record capital improvement expenses, a corporate bookkeeper credits the cash account and debits the corresponding capital improvement asset account, which is a fixed asset account. In accounting terminology, crediting cash means reducing company money. Fixed assets are those a business will use for several years, so it makes sense to include capital improvement expenses in the "fixed assets" category. Capital improvement assets are subject to depreciation, which spreads the resources' costs over the number of years an organization will use them.