Roof false ceilings get done in office of 175,000 please guide the accounts entry

Roof false ceilings get done in office of 175,000 please guide the accounts entry either record in expenses or assets

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Quick Summary
This discussion guides you on the correct accounting entry for a £175,000 office false ceiling installation. The advice depends on whether the office building is new or old. If the building is old, the cost is treated as an expense. If the building is new, it's typically added to the asset cost. However, if the building is rented, even if new, the false ceiling should be expensed as an indirect cost.

1) If  office Building is old then  you have  expense  out  Roof  Ceiling  expense  so entry  will be

Roof  Ceiling  Expense     A/c   Dr               175000/-

To Trade Creditors            A/c   Cr                                175000/-

(  Booking  of   roof  ceiling  expense ) 

expense  will be  under  indirect  expense  Profit & Loss Account 

When you make payment

Trade  Creditors       A/c    Dr                 175000/-

To  Bank                 A/c    Cr                                        175000/-

( Payment  of an expense )

 

2)  If  office Building  is new  then you have to add  roof  ceiling  expense in cost of an Asset 

    (  Cost  of  an asset  + Roof  ceiling expense ) = Total  value of an asset

    Entry  will  be

    Asset                      A/c   Dr            

    To Trade Creditors     A/c  Cr                                

  (  purchase of an Asset  )

   

payment  entry

  Trade Creditors          A/c    Dr              

  To Bank                    A/c    Cr                               

  ( Payment  made )  

please reply  your  office  Building  is new  or  old  ?.

  

 

OFFICE BUIDING IS NEW AND ON RENT

Then you have to pass first entry , show as an expense to profit and loss account .

Even if office building is new , its not an asset in your books of accounts , same is on rent and  therefore you have to show an expense . 

Nothing to worry about. If your renting it, it's always an indirect expense as you don't own that building asset even though it is useful for production but not directly. 

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