My company carried out a renovation of its rented office, is this a deferred revenue expenditure?

Question

The office rent has been paid for two years in advance and has no reasons to believe it will leave the premises in the forseeable future.

Answer 1

If it is a Capital nature expense you can capitalize it and depreciate over the rent period. That means 02 years.

However, in order to recognize asset one of the criteria is: it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity which is likely in your case.

Answer 2

According to IAS-16, all major renovations in a rented office should be capitalized and then charged to PnL over the period of rent agreement. In your scenario, you should capitalize the renovation cost. To determine charge to PnL every year, you need to check the rent agreement between your company and the owner of the building.

Answer 3

Hello

The question is weather its bring the asset to its desired location or conditions?its requires careful assessments.

Can you consider such cost as day to day service cost?i guess not because it would change the entire look of office.May be such cost not only maintained the office in current conditions but improved it and increase their useful life.in this capitalized the cost is appropriate.