Lesson: Improvements to Property, Plant and Equipment

In this lesson, Nick Palazzolo, CPA, dives into the nuances of accounting for improvements to property, plant, and equipment (PP&E). He explains how upgrades with finite useful lives should be handled differently from land, focusing on depreciation over their expected lifespan. Nick clarifies the distinction between land improvements, such as an underground water system, and non-depreciable land costs. He meticulously walks through the various costs associated with buildings and equipment, from materials and labor to professional fees and permits, underscoring the decision-making process of classifying these costs as either capital expenditures or immediate expenses. Expect to gain a thorough understanding of the intricacies involved in the capitalization versus expensing dilemma for PP&E improvements.