The financial accounting term reinstallation and rearrangement refers to a category of cost subsequent to acquisition. A rearrangement or reinstallation occurs when equipment is moved from one location and installed in another. This is typically performed to increase production at the receiving location.
Subsequent to assets being placed into service, they oftentimes require additional investments to either improve or maintain their productivity. Reinstallations and rearrangements are one of four categories of these investments; the others include additions, improvements and replacements, and repairs.
To capitalize costs associated with existing property, plant and equipment, one of the following three conditions must be met:
Oftentimes companies move in-service equipment from one location to another. This can be done to increase or consolidate production at the receiving location. If one of the above criteria is met, the cost associated with rearranging the location of the equipment can be capitalized if material; if not, the cost should be expensed in the current accounting period.
If the rearrangement and reinstallation is capitalized, the company has two options:
property, plant and equipment, costs subsequent to acquisition, additions, improvements and replacements, repairs, disposition of property, plant, and equipment, sale of property, plant, and equipment, involuntary conversions, acquisition cost