PPE-Post Acquisition Expenditures

Question 1

How should we depreciate extensions or enlargements of existing assets?

Answer 1

• If integral part of larger asset, over shorter of useful life or remaining useful life of larger asset
• If not, over useful life

Question 2

What are the accounting approaches for Capitalized Expenditures?

Answer 2

• Substitution: Remove old accounts and recognize loss, capitalize new costs
• Increase larger asset by post acquisition cost when productivity rather than useful life enhanced
• Debit accumulated depreciation when expenditure increases useful life of larger asset

Question 3

Is routine maintenance capitalized?

Answer 3

-No expensed