How addition cost of fixed asset is recorded

1

how addition cost of fixed asset is recorded

2

The same way that the original cost is recorded

Unless you want to record the additional cost separately in your accounts.

If you want more help, please give more details of the transaction in question

3

Original cost has the accumulated depreciation to be recorded then for asset purchased in year 2025 and register is being prepared for 2025 then how will the treatment be?

4

That’s not clear at all

If it’s a new asset, then there is no depreciation

For a fixed asset, you have to create the asset and then register the purchase and post the amount to thefixed asset account

Depreciation amounts are calculated and entered on an annual or monthly basis

1 Like
5

thanks, well noted.

6

At least for US IRS purposes, I believe, if an asset has been placed in service in a previous year, you do not add additional cost to the accounting basis of that asset; you create an ‘improvement’ asset, and begin depreciation in the year the improvement was placed in service; however, I don’t remember for sure, and you would need to ask you accountant/tax professional about that;.

Example:

  • Building built, incurring costs during the years 2022, 2023, and 2024 totaling $750,000, and building placed in service in 2024
    • No deduction (i.e. depreciation) recorded in 2022 or 2023.
    • Depreciation begins, when placed in service, in 2024.
  • Additional cost incurred for same building in 2025 (improvements), and improvement placed in service in 2025
    • Not added to original cost basis, new asset created in record, to the effect of ‘Building - 2025 Improvements’, and depreciation is recorded separately for that asset in 2025 and beyond.