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: Take roofs as an example. Patching holes and cleaning gutters count as routine repairs and maintenance expenses. By contrast, putting on a new roof extends the building's life span. Putting on new, better-quality shingles may enhance the property's value. On a company vehicle, replacing tires or putting in a new battery counts as standard maintenance. Replacing the engine is a capital improvement, as it extends the life of the car. Adding a hydraulic lift to a truck qualifies as increasing its overall value. Expense and Improvement Bookkeeping
Under GAAP, when your company repairs a fixed asset, you record it as an expense in your accounting journals. For example, suppose you pay $300 to fix a brake problem in your company truck. You report $300 of spending in cash or accounts payable and enter $300 in the vehicle maintenance account.