Accruals
kazflan
Registered Posts: 36 Regular contributor ⭐
The lease on a buliding was initially for 5 years. An estimate of costs was produced to cover dilapidations. the Company has been accruing that cost based on the 5 year period. the lease has been extended, this has given a lower rental but the dilaipdation costs have not changed. The costs in reality should now be split over the 10 years. We have therefore over accrued the costs. Would I be correct that I will recalculate the new accrual and release any over accrued amount.
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Comments
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yes release the over accrued amount.0
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If you estimated the dilap costs five years ago - e.g. 2007 - we'd first off revisit the estimate on what they might be five years from today - e.g. 2017 - since costs may have materially changed.
If you've still over estimated, yes we'd release the over accrued amount. If not, we'd 'freeze' the current accrual and start a new one based on the difference.0
