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Can I depreciate the pub building? Mortgaged with a bank for 25 years??

  • Fellow
  • Practice Licence
  • 26 posts
  • # 117400

Dear Fellow members,

 

I am in the process of taking over a book-keeping work for one pub through friends' recommendation., and need to prepare the first draft for the pub owner - limited company.

please can someone help if i need to put depreciation on the pub building which is currently mortgaged with a bank, building costs £173k, outstanding mortgage £110k, mortgage period is 25 years.

for companies house, the company will be preparing FRS 105 Accounts, and first year tax return will be submitted for the corporation tax.

 

Thank you in advance,

 

Ruchi

 

  • Affiliate
  • 11 posts
  • # 117402

Dear Ruchi,

I am not a fellow or qualified bookkeeper yet, but through my knowledge and study, I never came across about depreciation on building. It can be revalued time by time or on change of ownership. You can partially depreciate it if it is in a condition of serious damage to the owner or on cliff.

As long as I know it can be only appreciated.

I hope this will help you.

 

Thank you very much.

 

Kind regards,

Mehul

  • Member
  • Practice Licence
  • 8 posts
  • # 117403

Hi Ruchi, 

 

Not sure why it would be aappropriate to deprciate a building. depreciation is for things like machinery that will eventually need to be replaced. Buildings genersally dont stop working/fall to the ground after x amount of years and need to buy a new one. 

It might be more advisable for the company to have a reserves policy wherby they put x amount aside each year for general maintainence costs etc. but that would be part of their budget meetings after reviewing last years profit & loss. 

the mortgage should be put into the accounts as a long term liability, similar to a loan if this helps? the mortgage has nothing to do with depreciation. 

please take this in the nicest possible way but it may be advisable to seek help with this as isn't that complicated- are you studying at the moment? it will be covered in your level 3 syllabus if this helps at all. 

happy to chat if you need anything. 

 

  • Fellow PM.Dip
  • Practice Licence
  • 417 posts
  • # 117485

Hi Ruchi,

Maybe reading this from Accounting Weekly might help with your thoughts and decisions.

 

https://accountingweekly.com/should-buildings-be-depreciated/

  • Member
  • 2 posts
  • # 117514

Ruchi said:

Dear Fellow members,

 

I am in the process of taking over a book-keeping work for one pub through friends' recommendation., and need to prepare the first draft for the pub owner - limited company.

please can someone help if i need to put depreciation on the pub building which is currently mortgaged with a bank, building costs £173k, outstanding mortgage £110k, mortgage period is 25 years.

for companies house, the company will be preparing FRS 105 Accounts, and first year tax return will be submitted for the corporation tax.

 

Thank you in advance,

 

Ruchi

 

”Hello Ruchi ,
Yes ,you can depreciate the building-is the only way to charge the cost of it against the profit .
It can be revaluated  too and the depreciation will be charged on the revalued amount after that  .
Adina 


 

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