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Capital or operating expenditure?

Should the cage be capitalised ?

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One of our locations leases a building as their main business premises and wishes to install a "cage" in one of the rooms. This cage will not be a "4 walls and a roof" but more of a lean-to, fixed to existing walls in order to partition off an area. Should the cost of the cage be capitalised or is it operating expenditure?

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By David Ex
08th Oct 2021 12:20

Capitalised

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By paul.benny
08th Oct 2021 13:07

Are you asking for tax or financial statements?
How much is the spend and how material is it to your business?
Is there any corporate guidance?

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Replying to paul.benny:
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By Jayne2301
08th Oct 2021 16:23

Financial statements. It is material

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By paul.benny
09th Oct 2021 08:59

Then I'd probably capitalise it.

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By Hugo Fair
08th Oct 2021 16:43

If the 'cage' is "a lean-to, fixed to existing walls, in order to partition off an area" then it must be very big or grand to be material ... or is it something a lot more specialised (like a faraday cage or a security cage or whatever)?
Does it have a fixed shelf-life? Can it easily be de-constructed and removed? If so would that have an MV? What is the length of the remaining lease on the building?
As usual, these and many other questions, may get you closer to a relevant answer.

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By tom123
09th Oct 2021 11:15

In the past, I have capitalised things like mezzanine floors, and depreciated over the remaining lease term.

Probably little second hand value other than scrap steel in my case.

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