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Leased Property - Expense or Capital

accsvalue · 2014-03-07 09:43:51

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?

07-03-2014 9:43am

#1

accsvalue

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Join Date: January 2012

Posts: 3

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?

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Comments

#2 07-03-2014 10:20am

masoodsarwar

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Join Date: April 2011

Posts: 138

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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