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What expenses can we capitalize

D G's Profile

Our CPA firm has said we can capitalize utilities as part of the project expenses when we set up a new store (chain). Does anyone know what codification this might be?

I thought certain expenditures couldn't be capitalized if they did not produce future benefit like utilities or advertising?

Answers

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

Are you paying a utility vendor to install new service (e.g. running cable wiring to provide new service) or is it just the monthly invoice?

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Additionally, 2 questions:
1. what costs are incurred in providing utilities at the site prior to store opening (i.e. during construction)?
2. are the $ material? if not, forget it:)

D G
Title: Fixed Asset Accountant
Company: Retail
(Fixed Asset Accountant, Retail) |

No, we are not paying a utility vendor to run cables or provide services to the building. These stores are located in small strip malls where utilities are already provided. Typically, these are setting up utilities plus a deposit for regular ongoing services such as electricity, water, internet, etc.

D G
Title: Fixed Asset Accountant
Company: Retail
(Fixed Asset Accountant, Retail) |

Len,

Does this mean that utilities that are turned on prior to the store opening can be capitalized as part of the project in "bringing the asset into service"?

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

If you can determine cost of utilities up to date of store opening, then confirm with your CPA firm that you can capitalize this.
Finally- is it material? If not I would ignore it.

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