Title: Repairs and Improvements
Headings: Repairs and Improvements
Accounting Principles I
Repairs and Improvements

Content: Repairs and Improvements
Accounting Principles I
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Accounting Principles I
Repairs and Improvements
Repairs and Improvements
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Repairs and Improvements
Expenses relating to depreciable assets fall into two broad categories: ordinary expenditures and capital expenditures. Ordinary expenditures include normal repairs, maintenance, and upkeep. The costs associated with these items are considered normal operating expenses, and they are recorded by debiting expense accounts and crediting cash or another appropriate account. Capital expenditures increase an asset's usefulness or service life, and they are recognized by increasing the asset's net book value. There are two ways to increase an asset's net book value: the asset account can be debited, thus increasing the recognized cost of the asset, or the asset's corresponding accumulated depreciation account can be debited, thus decreasing the amount of depreciation previously allocated to the asset. If the capital expenditure serves primarily to increase the asset's usefulness or value, the asset account should be debited. On the other hand, if the capital expenditure serves primarily to increase the asset's useful life or salvage value, the accumulated depreciation account should be debited.