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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › overhaul
dear Sir Mike
What is overhaul expense? and is it capitalised?
Hi
It’s repair and renewals! To overhaul an engine is to take it out of its normal environment,. strip it down, replace anything that needs replacing and then re-commissioning it.
If it improves the earning capacity of the asset, then it’s capitalised. If it merely extends its useful economic life, then it’s expensed.
