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Extraordinary Repairs Definition
The extraordinary repairs in its field of accounting extensive repairs made to the asset.
And such as property and equipment PP&E, Which prolongs its helpful life and increases its book value.
And it’s set in contrast the ordinary repairs, which its consider regular and preventive maintenance.
Also it standard repairs are expense immediately rather than being capitalized.
How do Understand the Extraordinary Repairs?
- The extraordinary repairs it capitalizes, which means the repair cost increases the book value of the fixed asset that improves the repair.
- Also, the extraordinary repair cost added to the original fixed asset and can identify. As it separates frozen asset items directly underneath the original, it keeps clean accounting records.
- And fix 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 revises remaining life. And the depreciation expense flows through the company’s income statement.
What are the Qualifications of Extraordinary Repairs?
- The amount spent on the extraordinary repair of immaterial. And also, it’s extra efficient from the accounting perspective to charge.
- And the cost its expense as incurred, rather than adjusting the book value of the fixed asset.
- Similarly, if the machine’s expect life is only prolong by the few months, its extra prudent to expense the repair cost.
What are the Extraordinary Repairs vs. Ordinary Repairs?
- The accounting treatment of it .And ordinary also its different. And it standard repairs are record as the expenses in the current accounting period.
- Also, it’s leaving the book value of the related fixed asset unchanged. And also, expenses of the costs record on the company’s income statement in which the charge incurred.