117k views
3 votes
How are repairs treated under ASPE?

A. Capitalized and recognized as assets
B. Expensed immediately
C. Amortized over a specific period
D. Disclosed in the footnotes only

1 Answer

7 votes

Final answer:

Under ASPE, repairs are generally expensed immediately unless they provide a future economic benefit like extending the useful life of the asset, in which case they are capitalized as a betterment.

Step-by-step explanation:

Under Accounting Standards for Private Enterprises (ASPE) in Canada, repairs are generally treated as an immediate expense. When a repair is made, it typically does not extend the original life or improve the original functionality of the asset; therefore, it is expensed in the period in which the costs are incurred. Repairs are not capitalized unless they provide a future economic benefit like extending the useful life of the asset or improving its functionality beyond its original assessment, which would then be treated as a betterment and capitalized.

The correct answer to the question 'How are repairs treated under ASPE?' is B. Expensed immediately.

User Olly Cruickshank
by
7.7k points