Policies & Procedures Manual - Elizabeth City State University

400.1.59Adopted: 06/14/05ELIZABETH CITY STATE UNIVERSITYMaintenance CostsDefinitionMaintenance expenses are incurred to keep assets in normal operating condition and to helpmaintain the original use to the asset. Maintenance expenses do not extend the life of the assetbeyond the expected useful life at acquisition. These are costs incurred to keep the assetoperational throughout its useful life. Replacement of roofs, plumbing/ electrical systems andcarpet do not usually extend the original useful life of a building; therefore, these expendituresgenerally should be classified as maintenance costs. Other examples are engines on ferries whichare rebuilt after each season. This was an expected cost at the time of purchase. It does notextend the life of the asset longer than originally intended, so the costs are expensed.Maintenance CostsRegardless of the dollar amount, maintenance costs are expensed and not capitalized. The costsare charged to repairs and maintenance expense.Maintenance Costs ReviewECSU's Purchasing and Accounting Departments will review Maintenance Costs twice a year inDecember and June to assure that ECSU is maintaining equipment as economically andefficiently as possible and to consider the following:(1) Replacing an asset with higher maintenance costs more thanother similar assets;(2) Reducing maintenance costs by signing a service contract;(3) Comparing the costs of a service contract with a repair-as-neededprogram; and(4) to verify that the costs were for maintenance rather than amounts that should becapitalized.