We can help you weigh the cost of repairing an item against the estimated replacement value to help determine what best meets your accounting needs, to improve asset value or expense the repair.
What to factor into the repair or replace calculation
The decision to repair or replace equipment should be based on minimizing the total cost of the item over its remaining lifetime.
Things that factor into the calculation include:
1. Maintenance costs over the remaining service life
2. Impact of the repair on useful life remaining
3. Impact of the repair on product quality
4. Cost of unscheduled delay
5. Collateral costs of a breakdown (health, safety, environmental, etc.)
6. Overall property impact re demolition costs and associated unknown issues
7. Equipment disposal cost and/or salvage value
8. The cost associated with researching and purchasing a replacement
9. The capital cost of the replacement equipment, including the cost of money
10. The installation and certifcation cost of the replacement equipment
11. Improved marketing potential
12. Value gain or loss of the property overall
13. Ongoing costs to service the replacement equipment (both in and out of warranty)
After objectively analyzing this data, you’ll have a clear understanding of whether you should continue to repair that older piece of equipment, or just buy a more reliable replacement.