Studio improvements - capitalise as Fixed asset?

ExcelAnt Registered Posts: 80 ? ? ?

I am looking at a set of photo studio accounts and trying to internalise some of the expenses as fixed assets.

During setup of the studio they spent a large amount building the studio walls and layout (doors corridorors etc) However the property is a lease agreement for 3 years and when they leave it will need to be returned as it was when they commenced the lease. They intend to occupy the property beyond the 3 years.

Can any of the costs be internalised as a fixed asset and if so How?

Just a bit of a funny one to me as they do not own the property.

Thanks in advance


  • Emily
    Emily Registered Posts: 25 ? ? ?
    Could the walls, doors etc be classified as fixtures & fittings??
  • NeilH
    NeilH Registered Posts: 553

    The fact they don't own the property is irrelevant, what matters is that they are spending money and should it be written of as a period cost or capitalise the cost so as to spread the cost over its useful economic life.

    This isn't my area of expertise, but generally an extensive refurb can be capitalised.

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