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Means of Capital Expenditures Authorization Cea Form

Means of Capital Expenditures Authorization Cea Form

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If you watched the video about how to determine asset costs, you know that all costs incurred to get an asset ready for its intended purpose gets debited to a specific plant asset account like Land or Building. We call this process of debiting a plant asset account “capitalizing” a cost. But what do we do with costs we incur after the asset is in use? We have two options to treat costs incurred after a plant asset has been placed in service. We can capitalize the cost, which means we debit a plant asset account - and we call this type of cost a Capital Expenditure - or we can expense the cost, which means we debit an expense account, like Repair & Maintenance Expense. We call this type of cost an Ordinary Expense. Even though there are two ways to treat the costs, we don’t get to chose the one we want. There are criteria that determine how the costs should be accounted for. In order to be a capital expenditure, a cost must meet one of the following four criteria: Cost must

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