What are the Extraordinary Repairs? – Definition, Understanding, Qualifications, and More
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Extraordinary Repairs Definition
The extraordinary repairs in the field of accounting are extensive repairs made to the asset.
And such as property and equipment PP&E, Which prolongs its useful life and increases its book value.
It’s set in contrast to ordinary repairs, which are consider to be regular and preventives maintenance.
And standard repairs are expenses immediately rather than existence capitalized.
How Understanding the Extraordinary Repairs?
The extraordinary repairs are capitalized, which means the repair cost increases the book value of the fixed asset that improved due to the repair.
And the extraordinary repair cost added to the original fixed asset and can be identified. As the separate frozen asset item directly underneath the original, to keep clean accounting records.
And fixed assets are then consolidate and present in the long-term asset section on the company’s balance sheet.
Also, recording it in this manner increases the periodic depreciation expense recorded over the asset’s revised remaining life. And the depreciation expense flows through to the company’s income statement.