Renovations at your Expense


S

Scraps

If I am renting an office space and the landlord tells me that it is ok to
renovate, but it will be at my expense (Costing about 2000). How would I
enter this transaction. Could it be just maintenance and repairs for the
amount of the Renovations?
 
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S

S.M.Serba

Scraps said:
If I am renting an office space and the landlord tells me that it is ok to
renovate, but it will be at my expense (Costing about 2000). How would I
enter this transaction. Could it be just maintenance and repairs for the
amount of the Renovations?
Keep in mind I am giving examples, and your renovations may be different.
Any physical changes, eg. drywall torn down, new carpets, doors moved, new
drop ceiling, painting, new bathroom, new security system, sign on the
outside, landscaping, repaving parking, new electrics, new cabling for
phones or computers etc, you can book to an Other Assets type of account
called Leasehold Improvements. You can amortize the improvements. In Canada
you may amortize them over 7 years. YOu will have to look into leasehold
amortization rules in your jurisdiction.

Check with your accountant.
 
Z

Z Man

Scraps said:
If I am renting an office space and the landlord tells me that it is ok to
renovate, but it will be at my expense (Costing about 2000). How would I
enter this transaction. Could it be just maintenance and repairs for the
amount of the Renovations?
You have received a couple of differing opinions, but the fact is, you are
correct. Small amounts (and that would include a $2k renovation) should be
expensed in the current period as repairs and maintenance. For incidental
amounts, this is the appropriate treatment.
 
?

!-!

Scraps has a Newfoundland email address.
Amortization of leasehold improvements in Canada is straight-line over
the term of the lease plus one renewal, minimum 5 years. I don't know
where the "7 years" comes from. Most accountants (that I know)
consider leasehold improvements to be a fixed asset, not "other".

As was suggested previously, relatively small amounts are usually
expensed rather than capitalized. Of course "relatively small" is a
relative term!
 
A

Allan Martin

Scraps said:
If I am renting an office space and the landlord tells me that it is ok to
renovate, but it will be at my expense (Costing about 2000). How would I
enter this transaction. Could it be just maintenance and repairs for the
amount of the Renovations?
Depends on what was done.
 
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A

Allan Martin

S.M.Serba said:
Keep in mind I am giving examples, and your renovations may be different.
Any physical changes, eg. drywall torn down, new carpets, doors moved, new
drop ceiling, painting, new bathroom, new security system, sign on the
outside, landscaping, repaving parking, new electrics, new cabling for
phones or computers etc, you can book to an Other Assets type of account
called Leasehold Improvements. You can amortize the improvements. In
Canada you may amortize them over 7 years. YOu will have to look into
leasehold amortization rules in your jurisdiction.
In the US the depreciable period for Non-Residential Real Property is 39
years.
 
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