FACETED CLASSIFICATION OF REPAIR OF FIXED ASSETS FOR THE PURPOSES OF FINANCIAL AND MANAGEMENT ACCOUNTING

Abstract

Repair holds a crucial role in the realms of financial and management accounting. Within the scientific literature, numerous classification features and repair types have been identified. Nonetheless, not all of these classifications align with the objectives of financial and management accounting. In the context of financial accounting, the paramount consideration pertains to the materiality of expenditures associated with the maintenance and restoration of fixed assets. Predicated upon this criterion, the repair activities are categorized into either routine or substantial repairs. Expenditures incurred for both routine and major repairs within the purview of financial accounting are expensed during the reporting period. Nevertheless, should the repair efforts be attributable to a distinct depreciable component of fixed assets, such outlays will be capitalized. In the domain of management accounting, salient considerations encompass the frequency of repair interventions, the manner in which they are executed, and the origin of financial resourcing. These indicators assume significance in the context of both current operational and strategic management decision-making processes. In order to structure the classification features effectively, it is recommended to employ the facet-based method of classification. This method is characterized by the incorporation of a comprehensive array of attributes that are adaptable to the specific circumstances of each repair case. The facet-based approach offers the advantages of facilitating streamlined report generation and informed decision-making. Additionally, it allows for the seamless integration of novel classification features that may emerge in conjunction with evolving economic activities, as well as the exclusion of superfluous elements. Within the framework of the faceted method of repair classification, classification features are endowed with the status of facets, while repair types assume the role of facet values. Each facet is assigned a sequential identifier. The classification feature denoting the ‘significance of costs’ is designated as the first facet, ‘periodicity of implementation’ as the second, ‘implementation method’ as the third, and ‘source of funding’ as the fourth. A myriad of code combinations may be generated to represent various repair scenarios. For instance, the code 1.2–2.1–3.2–4.3 corresponds to a repair instance involving a planned capital renovation executed by a subcontractor and funded through grants.