Institute of Certified Bookkeepers
First Previous - Page 1 of 1 - Next Last

Accounting for Capital Improvement

  • Member in Employment
  • 3 posts
  • # 118409

Hi All,

I am an employee and BAS Agent for a single company. This company is expanding and building a new factory. I not sure how to set up for the Capital Improvement. I recorded the land purchase and set up the asset (no loan involved) which was easy. Do all invoices associated with this new construction, from planning costs through to construction and finishing costs get posted to an Asset account with a CAP tax code? Any help would be appreciated.

Cheers, Brenda

  • 1 post
  • # 118410

KrolB said:

Hi All,

I am an employee and BAS Agent for a single company. This company is expanding and building a new factory. I not sure how to set up for the Capital Improvement. I recorded the land purchase and set up the asset (no loan involved) which was easy. Do all invoices associated with this new construction, from planning costs through to construction and finishing costs get posted to an Asset account with a CAP tax code? Any help would be appreciated.

Cheers, Brenda

”Yes that should be Capitalized. As I've learned before you should capitalize any improvements on ony asset as an asset if it makes the asset bigger better or last longer. For example if you replaced the roof of your building because it will now fall off, the it would land to making the asset last longer that's why it should be capitalized. And all of it will be posted as asset. 


 

  • 3 posts
  • # 118818

KrolB said:

Hi All,

I am an employee and BAS Agent for a single company. This company is expanding and building a new factory. I not sure how to set up for the Capital Improvement. I recorded the land purchase and set up the asset (no loan involved) which was easy.  Local bookkeeping services go to  site company Your Books On Time. Do all invoices associated with this new construction, from planning costs through to construction and finishing costs get posted to an Asset account with a CAP tax code? Any help would be appreciated.

Cheers, Brenda


 

 

how did you solve the issue?

  • 6 posts
  • # 119275

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.

Now, suppose that instead of a $300 repair, you spend $4,000 installing a new engine, which is over the $2,500 cap limit. You record the $4,000 bill in cash or accounts payable and add $4,000 to the account for vehicle assets. You make the same sort of journal entries for building improvements or major upgrades to factory equipment.



Edited at 26 Nov 2020 10:37 AM GMT

First Previous - Page 1 of 1 - Next Last
loading