Building Depreciation & Impairment Review

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Hi

A client has recently purchased a building and unsure if I need to depreciate monthly or just perform an impairment review annually and apply FRS102. He is arguing the point that the building will never fall in value.

My gut says depreciate on a monthly basis and perform an impairment review/revaluation.

Any advice would be most appreciated.

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RLI
By lionofludesch
02nd Mar 2020 16:10

I'd depreciate annually but I infer that you're preparing accounts more often.

I agree with you. On the assumption that no disaster strikes the building which might suddenly impair its value.

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paddle steamer
By DJKL
02nd Mar 2020 16:36

Building will eventually reduce in value, building including land it sits on may not.

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By paul.benny
03rd Mar 2020 06:38

Depreciation
I'm used to preparing monthly accounts and therefore I'd depreciate monthly. If accounts are being prepared at a different frequency then match the depreciation calculation accordingly.

Impairment review
If the property is valued at cost, there's no requirement to carry out periodic impairment reviews; just charge depreciation.

Note that if it's an investment property, different rules apply.

The full text of FRS102 is here. See s17.
https://www.frc.org.uk/accountants/accounting-and-reporting-policy/uk-ac...
If you chose to revalue any fixed assets , it must be by asset class (eg

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