I have merged my 2 offices located at different places to one office where following expenses have been incurred installation of work station,cabling, AC removal and installation, server rooms ,training rooms etc....
should this expense be treated as capital work in progress or should it be treated as renovation expense and hit p&l
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Capital Work in Progress
Replies (3)
it will be capital expenditure.
If only existing assets are relocated, then it is a revenue expenditure.
Newly purchased assets are capitalised.
Refer AS 10 Property plant and equipment, for which expenditure is to be capitalise.
but in your case any expenditure relating to dimantling at old premises and installation in new premises is considered as shifting charges. so this will treat as subsequent expenditure. in this case you need to check "does subsequent exp increase in fututure economic benefits or not".
if Yes exp can be capitalise. else treat as revenue exp.
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