Deferred maintenance

Deferred maintenance is repairs to facilities and equipment that are not made when this action should be taken. The repairs are needed to keep assets functioning at a reasonable capacity level. Management typically elects to defer maintenance so that it can report higher earnings in the short term. Another reason is that the business has such inadequate cash flows that it cannot afford to make the necessary expenditures. A third reason for deferred maintenance is that certain assets are approaching the end of their useful lives, so management scales back on their maintenance towards the end of this period.