Construction expenses: A client rent/lease a space in a new building for office. My client incurred some costs during the construction to finish up her section. Most of the expenses are for the interiors; things like plumbing, bathroom/toilet hardwares, some wiring, cleaning,labour etc.
my client has an Scorp, took a personal
loan to pay for the costs since business loan was not available. My client statrted taking money out of the Scorps account for payback for the costs incurred. I have entered all the withdrawals into a construction account (asset
) pending when I have the details of the expenses.
Since this is not my client's building I know the costs cannot be capitalised.
I plan to treat the entire cost as rent at the end of the year. Although my client still pays rent, probably not as much as she is supposed to pay.
I'm yet to receive from my client the terms of agreement.
In the meantime, I'm I on the right path?