Field Notes
Capex borders: repair, improvement, or new asset
A practical way to sort fit-outs, overhauls, and reimbursed works before they distort the fixed asset register.
Year-end register problems often begin in project coding. A repair posted as capex, or an improvement buried in expense, both create work later.
Ask what changed
If the spend restores an asset to its prior condition, expense is usually the right home. If capacity, life, or function increased, capitalisation may be appropriate — with a clear asset or component to attach to.
Read the landlord clause
Fit-outs reimbursed by landlords or treated as lease incentives need careful matching. Capitalising the gross cost without the related arrangement leaves the register overstated.
Split bundled invoices
Contractors invoice in lumps. Finance must allocate across assets or components; dumping everything into “leasehold improvements — other” defeats later existence testing.
Time the conversation
Classification debates are cheaper in the month of the invoice than in the week before audit. A mid-year sample of projects catches patterns early.
When borderline projects have piled up, a capex classification assessment clears the path before the register review.