Billboards

Options
PGM
PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
Not sure if billboards is the right work, but;

We've leased a unit and want to put big expensive signs on it. Can the cost of which be capitalised? And if so, whats the correct way to depreciate, over the lenth of the initial lease?

Thanks :)

Comments

  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
    Options
    PGM wrote: »
    Not sure if billboards is the right work, but;

    We've leased a unit and want to put big expensive signs on it. Can the cost of which be capitalised? And if so, whats the correct way to depreciate, over the lenth of the initial lease?

    Thanks :)

    when you say signs do you mean to rent advertising space? or is it just for your advertising?
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Options
    A-Vic wrote: »
    when you say signs do you mean to rent advertising space? or is it just for your advertising?

    Its our own advertising, for the building services we do.
  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    Options
    Then it is an overhead and can be charged to P&L 100%
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
    Options
    groundy wrote: »
    Then it is an overhead and can be charged to P&L 100%

    Yep
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Options
    groundy wrote: »
    Then it is an overhead and can be charged to P&L 100%

    Even thought its a substantial investent? Thats what confused me a little, it falls more under the capital investment catagory than just advertising?

    Its likely to cost several thousand for the structure and advert etc
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    How long will it last?

    Is there a structure that 'holds' your advertising media or is the media itself 'nailed to the wall'?

    If it will last for more than a couple of years without change I would be inclined to capitalise it.
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Options
    How long will it last?

    Is there a structure that 'holds' your advertising media or is the media itself 'nailed to the wall'?

    If it will last for more than a couple of years without change I would be inclined to capitalise it.

    Its definitely going to last for more than a couple of years. There'll be some sort of structure attached to the side of the building, maybe lit as well.

    I wasn't sure if the term of the building lease would affect how long its capitalised for.

    Thankyou.
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
    Options
    but in that case doesnt it come with the lease otherwise the owner would have used it as advertising for himself? Does it state anything in the lease about it?
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Options
    A-Vic wrote: »
    but in that case doesnt it come with the lease otherwise the owner would have used it as advertising for himself? Does it state anything in the lease about it?

    Theres nothing in the lease about it. Its our responsibility to pay for all our own advertising costs structural or otherwise. And to remove when leaving. (Currently theres nothing at all on the side of the unit)
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    If you are going to capitalise (and it sounds like you should) you need to consider the useful economic life of the structure, rather than any reference to the lease, as presumably you would/could take it with you if you moved elsewhere.

    You then have to consider whether it qualifies for capital allowances. Instinctively I would think it does, but you would be advised to check.
  • cornflower
    cornflower Registered Posts: 129 Dedicated contributor 🦉
    Options
    At my company we spent a fortune on a bill board. Our auditors told us not to capitalize it but to write it off to the P and L. Not sure why but they said we were unable to capitalize it.
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Options
    If you are going to capitalise (and it sounds like you should) you need to consider the useful economic life of the structure, rather than any reference to the lease, as presumably you would/could take it with you if you moved elsewhere.

    You then have to consider whether it qualifies for capital allowances. Instinctively I would think it does, but you would be advised to check.

    Thanks all, I think we will go with this option. As it fits in with our capitalisation policy. And it'll reduce this years profits less! :D
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Options
    Another point, if we spend much time putting this sign up ourselves, can that cost be capitalised?

    I thought the answer was yet, but 2 people have just told me no..
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
    Options
    PGM wrote: »
    Another point, if we spend much time putting this sign up ourselves, can that cost be capitalised?

    I thought the answer was yet, but 2 people have just told me no..

    If you paid someone to come in and put up the sign you can put that to expenses
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Options
    A-Vic wrote: »
    If you paid someone to come in and put up the sign you can put that to expenses

    Everybody at work is paid! :D

    Say one of our employees spends a week on it, can that cost be capitalised like the materials used?
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    I'm sure you could capitalise the installation costs if you wanted to. It would be a little OTT to apportion part of your wages for the time spent doing so but I do not see a problem with the theory.
Privacy Policy