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