Maintenance and Repairs
Expenditures for maintenance are those required to maintain equipment in good working condition. Repairs are those expenditures required to bring equipment back into good working condition. Neither expenditure extends the intended useful life or changes the intended purpose of the asset. Therefore, costs incurred for maintenance and repairs are not capitalized. Floor and wall covering replacements (e.g., carpet, floor tile, and wallpaper) are considered maintenance and repairs, except when done in conjunction with a remodeling project.
Betterments
Betterments are capitalized if they meet the minimum requirements for capitalization as defined in PCS 004. Alterations made solely for cosmetic purposes are not capitalized.
Replacement Parts
Replacement parts generally do not increase the value and/or intended useful life of an asset. Therefore, replacement parts are generally not capitalized. However, if a significant increase in value or useful life is provided through a replacement part, the guidelines for betterments are to be followed.