Maintenance and repair or Capital improvement

[b.robbbo]

My small business refurbishes raised access flooring in data centers. An access floor panel consist of an isotropic structural steel component and a wear surface (its held up by pedestals). When the wear surface wears out most people toss the whole thing and buy another . Usually the structural panel is fine so we are in the business of reemploying them. My question is : Is there a dollar amount threshold for maintenance and repair? Does my service a become a capital improvement at some point ? Or is it amortized as furniture ?
Thank you in advance.

 

[David Bolenbaugh CPA]

It really depends on the company's capitalization policy. Some companies say anything over $500 is capitalized. A company could go either way on this. If it improves the function of the building then I would say capitalize, but if it is simply maintaining the flooring to continue the same usability as before replacement then I would say expense it as a repair/maintenance. I would lean more toward repair/maint myself.

As far as the cost of your services, they will always be the same type of cost as replacing the flooring. Your services are included in the total project cost of the replacement. So, if the company decides to capitalize the floor replacement then your services should be capitalized with the flooring. If expensed as repair, then your services are a repair cost.

Not sure why this would have anything to do with furniture, there is no furniture involved.

Hope this helps.