Capex/expense of office renovation

[ivc303]

Hi,

I am wondering if I should expense/capex an amount related to "converting a storage room into an office space". The invoice doesn't define the amount related to breaking down the storage room nor building the new office space.

Thanks,

 

[UncleSam]

There are many factors that play into this question, such as amount. Many companies will establish specific dollar amounts where they will capitalize an asset but below they will expense. Having worked as an auditor I can tell you we would not look at repairs and maintenance invoices below certain amounts due to scope limitations.

That being said, if it is a larger amount the thing to consider is if it is making the asset "bigger, better and longer" [insert "that's what she said joke"]. For this I would say that your asset is being made better as it is being repurposed into an office space and not just restored to a normal condition. I would probably say capitalize and hookup to a depreciation schedule. Though obviously I would need to see the invoice to completely advise you.