Manufacturing. Wondering best practice for handling back up equipment that is purchased (over our capex policy). If it's going to have installation costs later, what balance sheet account should it go to if it's not ready for use? The installation costs on this particular item won't be huge, maybe a couple grand, maybe if we determine the install costs are immaterial we go ahead and capitalize it and start depreciating?
USA Fixed Asset accounting
- Thread starter acctsrmgr
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In these cases, projects should typically be handled as "work in process" accounts or assets to be capitalized once they are put into use. This way, all costs, whether large or small, should be included as part of the total cost of the project or asset. Once the equipment is installed and in production, it can then be capitalized.