The Excavation cost to fix a tank underground is a part of tank cost. Likewise the motors/valves needed to install a tank and a loading rack for filling the tank – should be also a part of the tank cost. However, considering their significant $ value one should componentized the assets into Motors, Loading rack and Land improvements (excavation). Land improvements should be part of the tank cost as this is a sunk cost and can’t be separated possibly from the tank cost.

Question 1 – In case the company decides not to capitalize the future motors repairs / loading rack repairs – would componentization still be required?

Question 2 – Are these relevant components?

Please advice!