Renovation expenses

Dear All,

Can anyone please advise how I can account the payment made against renovation expenses.

Our office is getting renovated. The renovation work includes Purchase of New chairs, Tables, polishing of existing tables, Civil work etc.

So can anyone please advise how I can made the accouting entry for the same.

Thanks & Regards

Replies (8)

Abhijit: Capitalise all the renovating expense u had incurred according to their respective name.

Thanks for your reply.

Can you please eleborate the same. Exactly what I need to do for the accouting.

Thanks

Just make the entries as if you are purchasing the new assets. Ex : For polishing of existing table : Table A/c Dr. To Cash/Bank (Being amount paid for polishing of table)
Dear Kapil I don't feel polishing of table should be capitalised. its more of a repair and maintenance. if some tables are replaced with new tables then only new tables should be captialised. and any alteration in building structure during renovation should be capitalised to building. any renovation in the nature of repair should be debited to repairs. shivani

.

In my view the renovation expenses accounting will be governed by para 12 of AS 10, which explicitly states that improvement and repairs expenses can be capitalised only when such expenses either increases the future benefits from existing assets beyond its previously assessed standard performance or such expenses are addition or extension, which has separate identity and is capable of being used after the existing asset is disposed off.

All other improvement expenses will be charged to P&L.

So one has to evaluate each expenses on parameter of AS 10 to determine whether such expesnes can be capitalised or need to be charged to P&L

maine bhi to wahi kaha mayur ji

Shivaniji,

I have just added to your reply, in order to make it more elaborative.

Further reference to standard will help one to understand the logic behind capitalising expenses. 

Hope this has added value to discussion.

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