Can you capitalise refurbishment costs

Depending on how you argue the case it is not straightforward to decide whether to capitalise or not to capitalise. If we do capitalise the replacement parts then the old parts should be derecognised. That makes sense. We are not using them any more and if we genuinely physically dispose of the seats then we should in the accounts too.

FRS tells us that if the replaced parts did not have a book value of their own, that is, they were not depreciated separately to the main asset then we should estimate its disposal book value by taking the replacement cost and applying depreciation to it for the period it has been used paragraph IAS 16 Property, plant and equipment takes a different approach.

Maintenance and the day-to-day servicing of an asset is still a revenue expense. IAS 16 suggests that this includes labour, consumables and small parts paragraph But any addition to a non-current asset is capitalised paragraph These additions do not need to show an incremental future benefit. The new seats in the aeroplane are capitalised. Repainting the aeroplane is capitalised.

Any addition is capitalised even if there is no incremental benefit. There is no more judgement. The risk of fraud is reduced. IAS 16 also tells us that if we capitalise the new seats then we also dispose of the old seats paragraph 13 just like FRS If the disposed component does not have a net book value of its own then we value the old component as the same as the cost of the replacement paragraph We do not depreciate it as we do in FRS Obviously a lot of work has gone into redecorating the building and bringing it up to a good standard.

How much of the refurb costs can be legitimately capitalised? So far I have put them all down as repair and maintenance expenses but want to capitalise at least some.

I would be inclined to discuss this with the accountant. Chances are there will be some things that will be revenue expenditure and some capital expenditure, depending on the exact nature of it. All related project costs must be considered in determining whether the threshold is met.

In cases where a capital improvement fund is used, a construction project number, as well as a budget, is established by the Facilities Management department.

Facilities Management is then responsible for the management of the project budget. If a combination of state appropriations and local funds are used to fund a project, it is acceptable to use one project number, because the separate fund numbers will show the breakout of costs by funding source.

The capital improvement fund number to be used depends on the whether the project is funded from state appropriations, local funds or grant funds. Fund University Capital Improvements — This fund is for appropriated capital improvement projects, including extraordinary repairs, funded from State General Fund dollars.

Fund University Capital Improvements — This fund is for non-appropriated, non-grant funded projects for all departments except those in the Agriculture division. Projects funded from gifts, bond sales, local fund sales and service revenue, fall into this category.

Fund Agriculture Capital Improvements — This fund is for the same funding sources as fund , but for projects managed by the Ag Budget Office. Repairs or other non-capitalized costs should not be charged to the above account code groups. The non-capitalized account codes in the — account code range will be inactivated in fiscal year Repairs and similar costs should be charged to the repairs account code group.

Capital Expenditure costs are funds spent to improve assets beyond their original benefit. Related articles. Read about it. Business strategy. See all related articles. Services Selling a business. Industries Financial. Sell a business in QLD. Sell a business in SA. Sell a business in VIC. Sell a business in WA. Book your free business valuation. Want to know what your business is worth?

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