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Dilapidations can you capitalise?

Dilapidations can you capitalise?

Hi

I'm really hoping someone can provide some advise on this.

We have a current dilapidations provision which was initially capitalised and realised over the minimum lease period.  Our auditors are insisting we revalue the existing dilaps provision as it is 6 years old.

If the provision goes up how is this accounted for?  Would we capitalise the increase ie. DR Leasehold Improvements/ CR Dilaps Provision? 

If so when would the additional depreciation occur from?  eg.  we find out at the end of our financial year the dilaps provision now should be £100k higher and we are 6 years into a 10 year lease, would the double entry look like the below:

DR Leasehold Improvement £100k

CR Dilaps Provision £100k

DR Depreciation Charge £60k

CR Accumulated Depn £60k

We account under FRS102.

Any support would be massively appreciated?

Thanks

Dave

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29th Oct 2018 23:17

Eh? I would have thought the dilaps provision was an increasing (generally) liability with the Dr going to the P&L rather than being capitalised.

But you should probably get the auditors to explain it to you...

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30th Oct 2018 08:53

Yes I agree a Dr to P&L....if it is something else via a more roundabout route then it just goes to show the horrible state of accounting these days......

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