What are Maintenance Expenses?

Maintenance expenses are the costs associated with keeping an asset in working order and good condition.

How Do Maintenance Expenses Work?

For example, let's assume that Company XYZ is a restaurant chain. Its regular maintenance expenses might include having the kitchen hoods and other major equipment serviced once a year, having the vents and grease trap cleaned every so often, having the landscaping cleaned up every spring, and having the air conditioning system serviced.

If Company XYZ owns the buildings, the maintenance expenses are its responsibility. If Company XYZ is renting the buildings, some of the maintenance expenses might be the landlord's responsibility (and the landlord has likely thought of that and included that in the rent it charges Company XYZ).

Why Do Maintenance Expenses Matter?

Almost all assets have maintenance expenses, and they can vary considerably. It is important to note that maintenance expenses typically appear on the income statement and thus reduce profits in the period in which they are incurred. There is sometimes a fine line between maintenance expenses and capital improvements, which are capitalized on the balance sheet (and thus don't directly reduce profits in the period in which they are incurred). Though most maintenance expenses very clearly cannot be construed as capital improvements, the argument is tempting for managers who want to show the highest possible profits.

Ask an Expert about Maintenance Expenses

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Maintenance Expenses.

Be the first to ask a question

If you have a question about Maintenance Expenses, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

Verified Content You Can Trust
verified   Certified Expertsverified   5,000+ Research Pagesverified   5+ Million Users