What are Major Repairs?

Major repairs involve large expenditures that extend the useful life of an asset. For example, the replacement of a building roof is considered a major repair if it allows the building to be used beyond its normal operating life. Or, the engine in a forklift is replaced, thereby extending the lifespan of the equipment.

Accounting for Major Repairs

In accounting, major repairs are capitalized as assets and depreciated over time. They are recorded as separate assets from the structures on which the work was done, which makes it easier to trace and capitalize the expenditures associated with specific repairs.

Minor repairs do not extend the useful life of an asset, and so are charged to expense as incurred. Given this difference in treatment, it is critical to properly define what constitutes a major and minor repair, and consistently apply this definition in all cases.