Improvements Definition – What are Improvements?

Accounting Glossary 

Improvements definition. Analyzing the definition of key terms often provides more insight about concepts. Improvements can be defined as – Expenditures to make a plant asset more efficient or productive; also called betterments. Like the purchase of property plant and equipment, improvements should be capitalized, as an asset, and then depreciated in accordance with the matching principle as opposed to being expensed at the time of improvement. The reason for the treatment of improvements as an asset is because improvements generally extend the useful life of an asset and will, therefore, benefit future time periods. The cost of improvements should be matched with the time periods the improvements were used to help generate revenue.