Extraordinary Repairs

DEFINITION of 'Extraordinary Repairs'

Unusually extensive maintenance work performed on a piece of machinery to increase its useful life by over a year. Ordinary repairs are maintenance items necessary to keep machinery functioning, which are anticipated by the initial estimate management makes about the asset's useful life. For example, ordinary repairs might include getting an oil change on a vehicle, while extraordinary repairs would include replacing a transmission with a new model that extends the car's expected life.

BREAKING DOWN 'Extraordinary Repairs'

The accounting treatment of ordinary versus extraordinary repairs is different. Ordinary repairs are simply recorded as expenses in the current period, and the book value of the asset remains unchanged. On the other hand, extraordinary repairs can increase the book value of the asset, increasing depreciation expenses in future periods. Extraordinary repairs are capitalized.

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