Chapter 10, Problem 8DQ

To determine

Ordinary Repairs:

Ordinary repairs are the repair cost incurred by the company in order to upkeep the working of the machinery. It implies that the machinery is properly functional, and also these expenses are not capitalized because these costs do not tend to contribute to the productive life of the asset.

Extra-ordinary Repairs:

Extra-ordinary repairs are the costs incurred by the company in the process of up gradation or overhauling of the machinery which ultimately adds to life of the machinery and increases its usefulness. These are not incurred as general expenses.

To explain: The difference between ordinary repairs and extra-ordinary repairs and the way they should be recorded.