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: 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. Fixed Assets and Useful Life
Knowing the difference in GAAP between making repairs to business property and capitalizing building improvements, for example, requires understanding fixed assets and their useful life. Fixed assets include vehicles, computers, furniture, buildings, land and machinery, among other items. To qualify as fixed, an asset has to have a useful life greater than one year and be worth more than the company's capitalization or cap limit. By treating purchases below the cap limit as expenses, businesses can skip the record keeping required for depreciating capital assets. 00:00
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Useful life is how long your accounting treats an asset as having value.