FA treatment

FA treatment

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I have a client (Ltd company), who had 3 restaurants but 2 of them were closed. Now he is planning to close this one in the near furture (the company is going to liquidate).

All 3 resturants are lease hold.

My question is

  • can we write off the vaule of 2 resturant already closed, such as decoration expense?
  • If so where is this difference go, P&L or revaluation reserve?

Any comments would be highly appreciated!

Many thanks !

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Euan's picture
By Euan MacLennan
27th Oct 2011 13:39

I am confused by the question

If these are leasehold premises, why would you not have charged decoration direct to P&L in the first place?

If these are leasehold premises which have been revalued, they will become investment properties now that they are no longer used in the trade, so they need to be valued again.  If the current valuation is less than the previous one, but more than the original cost, you charge the reduction to the revaluation reserve.  If the current valuation is less than the original cost, you write off the revaluation reserve in respect of that property and charge the deficit to the P&L as impairment.

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