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Ordinary Repairs vs. Capital Improvements definitions

컨트롤 버튼이 '내비게이션' 모드로 변경되었습니다.
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  • Ordinary Repairs
    Routine maintenance costs necessary to keep a fixed asset operational, typically expensed immediately on the income statement.
  • Capital Improvements
    Expenditures that enhance or extend the useful life or capacity of a fixed asset, added to the asset's value on the balance sheet.
  • Fixed Assets
    Long-term tangible resources used in business operations, such as machinery or vehicles, subject to maintenance and improvements.
  • Income Statement
    Financial report where expenses like ordinary repairs are recorded, reflecting a company's profitability over a period.
  • Balance Sheet
    Financial statement showing a company's assets, liabilities, and equity, where capital improvements are capitalized.
  • Maintenance Expense
    Cost category for routine upkeep of assets, such as greasing gears, directly reducing net income in the period incurred.
  • Depreciation
    Systematic allocation of the cost of a fixed asset, including capital improvements, over its useful life.
  • Useful Life
    Estimated period during which a fixed asset is expected to be productive for its intended purpose.
  • Asset Value
    Monetary worth of a fixed asset on the balance sheet, increased by capital improvements.
  • Journal Entry
    Accounting record documenting transactions, such as expensing repairs or capitalizing improvements.
  • Modification
    Alteration to a fixed asset that increases its output or extends its life, typically treated as a capital improvement.
  • Capacity
    Maximum output or productivity level of a fixed asset, which can be increased through capital improvements.
  • Expense
    Outflow of resources recognized on the income statement, such as costs for ordinary repairs or maintenance.
  • Cash
    Asset used to pay for both ordinary repairs and capital improvements, credited in related journal entries.
  • Machinery
    Example of a fixed asset subject to both ordinary repairs and capital improvements in business operations.