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?