UK Business set up cost

[fatema qader]

Hi,

I work for a co. that sells furniture online and have recently rented an empty space to open up a showroom. We have incurred a hefty sum for the set up cost including the following:

# Property agent fees
# Cost of contract negotiation
# Decoration of the warehouse
# other various

The tentative time of completion of the warehouse is in March'15 from, that is when we hope to start operating from there.

I have gone through the FRS 102, but it only mentions about investments in properties but does not say anything about set up cost on a rented property.

Would appreciate if we could have a feedback on the above costs, should we capitalize the set up cost or treat them as an operating expense?

 

[Ludmila]

Hi,

I work for a co. that sells furniture online and have recently rented an empty space to open up a showroom. We have incurred a hefty sum for the set up cost including the following:

# Property agent fees
# Cost of contract negotiation
# Decoration of the warehouse
# other various

The tentative time of completion of the warehouse is in March'15 from, that is when we hope to start operating from there.

I have gone through the FRS 102, but it only mentions about investments in properties but does not say anything about set up cost on a rented property.

Would appreciate if we could have a feedback on the above costs, should we capitalize the set up cost or treat them as an operating expense?

Hi
All above expenses should be taken into account and set against profits for the current accounting period of your company. I mean all of it. The company is expanding so this involves expenses.

 

[tanvirnabi]

Your set up cost should come on first priority. At the same time you should focus on the quality of work but you need to follow cost effective way.

 

[Triest123]

Hi,

Would appreciate if we could have a feedback on the above costs, should we capitalize the set up cost or treat them as an operating expense?

# Property agent fees => Expenses
# Cost of contract negotiation => Expenses
# Decoration of the warehouse => Fixed Assets
# other various => Expenses