There are two types of expenditures that involve fixed assets:
To understand what this means, look at the cost to own and operate a truck: Say your company purchased a truck that has a useful life of 10 years. The cost of the truck is a capital expenditure. The estimate of the truck's useful life is based upon normal wear and tear and the expectation that the truck will be properly maintained. The truck will be recorded as an asset.
Every time the oil or tires are changed, your company has spent money on the truck. And, while those changes will enable the truck to continue generating revenue for the company, they have not really extended its life or increased its value. Those items are revenue expenditures and can be immediately recorded as an expense.
Now consider the same truck, which has been used for eight years and is still quite wonderful! The company decides to overhaul the truck with a new engine and transmission and now expects the truck to continue running for another eight years. Because those changes have significantly impacted the value of the truck and extended its life, they are capital expenditures, or assets, and must be depreciated over the extended life (in this case, eight additional years).
The phrase extraordinary repairs refers to the restoration of an asset that increases its life beyond normal expectations. Extraordinary repairs create an asset account and begin a new depreciation for the extended life. For example, the renovation of a historic building or the restoration of a 1940s automobile are both extraordinary repairs.