Accounting of Building Construction Charges

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When undertaking building repairs and maintenance, a key accounting question arises: should these costs be treated as a P&L expenditure or capitalised as an asset on the balance sheet? If the renovation provides enduring benefits and extends the asset's life, it's generally advisable to capitalise the expenditure. Ensure you prepare and obtain signed vouchers from the payees for these transactions.

Santosh

Santosh (Querist)

14 February 2020 Hi,

I have a building, and the building is under repair and maintenance for this I have been charged some money.
the maintenance and construction work has been doing by local laborers.
Here my question is the cost whatever I incur to renovate the building must be shown in P&L or in Balance sheet as a Asset or as a Expenditure?.

Santosh

Santosh (Querist)

19 February 2020 Hi Sir,

Could anybody can help me on my query...?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

07 March 2020 Due to renovation you are getting enduring benefits as the same is going to increase the life of the asset. So it is advisable to capitalise the expenditure. Prepare vouchers and get signed them from the payee.

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