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Fixed Assets

Hi, Would costs incurred in moving an assets from 1 location to another location satisfy the criteria for capitalization? What if the move is required to ensure there is better efficiency and productivity? What are the requirements under US GAAP for capitalization of moving, reorganization costs of existing Fixed Assets? Thanks

Answers

Yirga Alebachew
Title: Financial Analyst
Company: ethio telecom
(Financial Analyst, ethio telecom) |

I don't think it would fit the criteria unless otherwise there is huge modification that would increase the value and life of the asset

Nick Sinigaglia
Title: SVP
Company: OnDeck
(SVP, OnDeck) |

Generally speaking, in order to capitalize the moving costs, the move must somehow increase the value or useful life of the asset. If your company is simply "moving," then I would think you wouldn't meet those criteria. If you do determine the costs to be capitalizable, I would very thoroughly document why as I would expect your auditors to be all over it. Since I'm currently traveling, I don't have the specific ASC reference, but I know the criteria are clearly spelled out. The guidance doesn't specifically reference moving an asset, but the general spirit should be covered under asset modifications and improvements.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

While I agree with both Yirga and Nick, based on what you said, I wouldn't capitalize it either, here's my question to you:

Why would you want to capitalize it?

(Agent, JKS Solutions, Inc.) |

Moving costs associated with moving equipment from place to place, such as when a large piece of medical equipment is moved from one part of the room to another spot or between floors of a hospital is not capitalizable.

Moving costs in general if moving your entire business to a new physical location are not capitalizable, they are to be expensed. Moving a single piece of equipment is similar, the cost is to be expensed in the period incurred, and this includes any IT configuration changes such as cabling, and labor.

Costs incurred to improve patient flow or efficiency are not associated with the cost of the delivered equipment and therefore are considered a period cost and expensed.

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