Movie Case Study
The scene that you saw shows Raju & P.K Girpade having a conversation with Dyaneshwarprasad (played by Kader Khan). Raju (played by Govinda) mentions that all major maintenance contracts are with Mr. P.k. Girpade. Learning Perspectives in this blog will explore the meaning of maintenance costs in a business.
What are Maintenance Costs in a business?
Maintenance costs are expenses related to business. These costs are the ones that can be related to expenses incurred for the maintenance of the business. These can be website expenses, expenses related to the procurement of raw materials, or the acquisition of assets.
Regular maintenance of various assets is also classified as maintenance cost for the business. For example, in a restaurant, ovens, and gas stoves require regular maintenance, also delivery vehicles require regular diesel or petrol. All these expenses in the business are maintenance costs.
These expenses are debited and are shown on the left side of the income statement or the profit & loss account. In the ledger, if these expenses are related to the motor vehicles, they are debited to ‘repairs’ in the motor vehicle account.
Difference between Capital expenses (CAPEX) and Maintenance Expenses
CAPEX are those expenses that are long-term in nature. These expenses are incurred to increase the life of the business asset. While the maintenance expenses are incurred for regular or day-to-day expenses to keep assets in good condition. These expenses are known to not go beyond a twelve-month period. For this reason, CAPEX is expensed in the balance sheet on the asset side.
Understand Maintenance Costs with a Video