Office Ceiling Repair: Expense or Capitalise?

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A business owner is seeking guidance on whether significant repair work to an office ceiling, costing around £100,000 for labour and materials due to water leakage, should be treated as an expense or capitalised. While some suggest capitalising it and depreciating, others lean towards expensing it as maintenance if it doesn't represent a structural upgrade and has a limited lifespan of 4-5 years.

SACHIN

SACHIN (Querist)
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12 May 2023 Dear Sir,

We made repairing work at office ceiling due to Water leakage & Costing is around 10 Lacs.
Approx. 6 Lacs for labouring & 4 Lacs for material use for repairing Both supplier is separate.

Now Question is that this would be Expense out or Capitalized in books ?
Please explain.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 May 2023 Such expenses are generally capitalized.

SACHIN

SACHIN (Querist)
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12 May 2023 Suppose We capitalized but the same situation is happen after Certain years, & Expenses will incurred.

So, What to do in this situation.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 May 2023 Depends upon nature of repairs and its life cycle.

SACHIN

SACHIN (Querist)
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15 May 2023 As I confirmed that this will be last up to 4 to 5 years or may be some unexpected years.
So in this case should we capitalized or Expense out ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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15 May 2023 Its capital expenditure and allowed for depreciation, no other option.

CA Syed Raza Abbas Rizvi

CA Syed Raza Abbas Rizvi (Expert)
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16 May 2023 According to the information given, it appears that the office ceiling repair work was more of a maintenance or restoration investment than a structural upgrade or improvement. In this situation, it is likely that the charge will be recorded as a revenue expense and expensed on the income statement.

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