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Leased Property - Expense or Capital

  • 07-03-2014 10:43AM
    #1
    accsvalue
    Registered Users, Registered Users 2 Posts: 5 ✭


    Company has a 10 year lease on an office building. Rent is €30,000 per year. Is it written off to profit and loss account or can it be capitalised?


Comments

  • #2
    masoodsarwar
    Registered Users, Registered Users 2 Posts: 152 ✭✭masoodsarwar


    Rent is a revenue expenditure so it can not be capitalized.
    secondly, if the company is paying rental on a leased asset (operating lease) how can you capitalize the rent. Even if its a finance lease, the rental payment will be split into principal and interest.
    Principal payment will discharge the Finance lease liability and interest will be charged to P&L.
    Hope this makes sense


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