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Do you capitalise counciltax & utility on propert

Accounting treatment of council tax & utilities on purchased properties in refurbishment

Organisation is currently purchasing old units which require refurbishment before they can be let by the organisation. 

Council tax and utilities bills for the properties are received and paid by the asssociation during the refurbishment phase. What should be the acounting treatment of these expenditure? Should these expenditures be capitalised? This properties will be let as soon as they are of decent standard. Development director wants them capitalised but the Finance director is against this treatment and would rather have them expensed in I&E.

 

 

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By DJKL
10th Aug 2018 12:43

I expense annual costs re our properties in such a scenario, happy enough to augment with planning fees etc (providing we actually go somewhere with the planning etc) but have never reconciled myself to capital treatment re overheads/running costs/interest- at heart I am a product of the 1980s and SSAP2 and to me augmenting the carrying cost with such items just jars with prudence.

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10th Aug 2018 15:39

Your finance director is a most judicious man or lady.
These are revenue expenses and a deduction from income.
They are far removed from the notion of capitalisation.

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10th Aug 2018 15:39

Your finance director is a most judicious man or lady.
These are revenue expenses and a deduction from income.
They are far removed from the notion of capitalisation.

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10th Aug 2018 15:39

Your finance director is a most judicious man or lady.
These are revenue expenses and a deduction from income.
They are far removed from the notion of capitalisation.

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10th Aug 2018 15:39

Your finance director is a most judicious man or lady.
These are revenue expenses and a deduction from income.
They are far removed from the notion of capitalisation.

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to Mrbailey
10th Aug 2018 16:31

Quote:

Your finance director is a most judicious man or lady.
These are revenue expenses and a deduction from income.
They are far removed from the notion of capitalisation.

Same non-flowing turn of phrase as Abattoir Man ... albeit less CAPITALS ...

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10th Aug 2018 16:32

I have a large property group client who are audited by a big4. They capitalise these costs.

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By Ruddles
to atleastisoundknowledgable...
10th Aug 2018 18:50

Quote:
I have a large property group client who are audited by a big4.

I shouldn’t have thought that would add much comfort.

The expenditure is clearly revenue in nature, with no obvious enduring benefit of the expenditure.

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10th Aug 2018 17:54

My argument too, to expense the costs but the development director is looking the opportunity of more funding as the organisation receives grant towards the costs of these properties from a local council. We have blatantly refused the capitalisation because we know the auditors could pick up on such costs.

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10th Aug 2018 23:16

Are you capitalising the refurbishment works? If so, then surely you could make a case for capitalising electricity costs? It's the electricity that'll be powering the tools after all.

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