Such kind of repair and maintenance usually have a high cost if compare to expenses. These are the repair and maintenance which need to capitalize as the assets and calculate depreciation. Moreover, the repair and maintenance can increase the asset’s capacity above the normal capacity. The repair cost may be lower than purchasing new assets so the company prefers to do so. Some assets are reaching the end of useful life, however, repair and maintenance can extend the useful life beyond the original useful life. Without such kind of repair, the assets will not be able to use and require write-off. However, the company can spend some money to repair the assets and bring them back to life. Some assets are broken due to the accident so they are unable to operate. It is the major repair that necessary to achieve otherwise assets will not be able to use. Capitalized Repair and maintenanceĪny repair and maintenance expense that increases the assets’ useful life or production capacity will be capitalized into the assets. The repair and maintenance will be present in the income statement while cash is deducted from the balance sheet. Account Debit Credit Repair and Maintenance Expense 1,000 Cash 1,000 The journal entry is debit R&R expense of $ 1,000 and credit cash with the same amount. These expenses need to record as R&R expenses in the income statement. Please check if any expenses related to repair and maintenance expenses.īased on the expenses list above, there are three items related to repair and maintenance expenses. During the month of November, the company spends $ 5,000 on the various expense which includes: Repair & Maintenance Expense Journal Entry ExampleĪBC is a consulting company that provides accounting services to other entities. If the company pays cash immediately, it will be deducted from the balance sheet. Accounts payable is the company obligation to pay the supplier in the next period. Repair and maintenance expenses will be present on income statement and reduce the company profit. This transaction will impact both income statement and balance sheet. Account Debit Credit Repair and Maintenance Expense 000 Accounts Payable/Cash 000 The journal entry should be debiting repair and maintenance expenses and credit accounts payable or cash. Repair and maintenance expense is recorded as the operating expense base on accrued basic.
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