BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Generally maintenance cost / repairing cost are less for less expensive items and more for more expensive items. Hence Value of Machinery is the Factor for budget for Repairs to machinery .

Detailed explanation-2: -Repairs to machinery is shown as expenses in Profit or loss account.

Detailed explanation-3: -Repairs to machinery is debited to machinery account instead of debiting to repairs and maintenance account i.e. it is treated as capital expenditure instead of revenue expenditure hence it is error of principle.

Detailed explanation-4: -Repairs and maintenance are expenses for normal maintenance and upkeep of capital assets that are necessary to keep the assets in their usual condition. These expenses are recurring in nature and do not extend the useful life of the asset.

Detailed explanation-5: -What is the journal entry of paid for repairs? To record a repair or maintenance expenses in your records, Debit the repairs & maintenace expenses & Credit either the cash or accounts payable account . If it is general repairs and maintenance : Dr repairs / maintenance a/c.