Accounting for fixed asset expenditure on a leased property

Accounting for fixed asset expenditure on a...

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We have recently moved into new leased premises and have spent a lot of money fitting the office out with things such as: Partioned Walls, plumbing, electrics, carpets, door entry system, cabling for computer network..........

What is the correct accounting method for these costs?

Am I right in thinking that you should put these items on the Balance Sheet and depreciate over the term of the lease? If this is the case, how do you determine the length of the lease if there is an option to extend say after 5 years?

Any advise would be greatly appreciated.
Andrew Shaw

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By User deleted
16th Jun 2009 20:55

How do you get tax relief on the expenditure?
I am in a similar situation and whilst I am happy with the accounting treatment, I am not sure how to get tax relief/capital allowances on the leasehold improvements.

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By TraceyBurgess
16th Jun 2009 17:02

Leasehold depreciation
I would check first what the published treatment for leasehold depreciation is (usually in the notes of your stat accounts) for your company.

But yes you should show them as non-current assets and, usually, depreciate them over the length of the lease - unless the notes say otherwise.

You should assume the lease length is the shorter of the two periods - there's no point depreciating over 10 years when you could be moving out in 5!

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