"PPE" Office Improvements Expenditure on Rented Property!

131 views 11 replies
Hello,
I want to know the accounting treatment of expenditure done on newly rented property, and why?

The expenditure is as follows:
1. Interior
2. Furniture
3. Electrical fittings
4. Cabins etc.
Replies (11)

If this is new start up, expenditure related to PPE is capitalised eg., computers, laptops, voip, furniture, headsets, electrical fittings if hey are related to computers. Other pre operative expenses are expensed like interior, cabins.

Hi Yasaswi,
It is not a startup, It is merely just shifting to a new rental property from old rented property.
The new office is in the process of getting ready, and not in use till now.
Does it means, only new furniture and electric fittings should be Capitalised and rest like interior design from architect, expenditure on cabins, bathrooms should be expensed?
All this should be treated as assets
New furniture and electric fitting can be capitalised, and interior design exp can be booked as revenue .

Bathrooms are expenses Mr. Badal Shukla.

On a second thought, there is no gaap to define factory premises. Since, factories, within their boundary wall is treated as PPE, construction bathrooms can be capitalised but not maintenance expenses.

Under which para of AS 10 PPE, it is required to be Capitalised?

That’s a good one, only As10.25 and as 10.91 mentioned capitalisation, but in common accounting terminology, all assets are capitalised. 

 

Here capitalising of expenditure means, including them in the carrying amount of PPE. 

Thanks a lot 🙏🙏🙏

Your welcome and in the future if want info regarding this, MCA publishes all accounting standards online for free. You can use it to clarify your doubts. Go through IndAS 16 and it has more transparent and easy to understand rules. One can easily understand that capitalisation can be two ways, separately presented and included in the carrying in the carrying amount, next, in as 10, I think additions is also separately presented on the balance sheet. This additions in as 10 clearly defines how to account for in IndAS 16 in the name of contract asset. One can find many useful things. 

I meant stripping asset lol contract asset is revenue with customer contracts 


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register