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    kwaiser's Avatar
    kwaiser Posts: 1, Reputation: 1
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    #1

    May 23, 2012, 12:59 PM
    Disposal of Asset to Create New Asset
    We had to demolish a parking lot that has a NBV remaining in order to expand a building. Is the NBV of the parking lot considered part of the new building costs?
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    May 25, 2012, 04:06 PM
    Quote Originally Posted by kwaiser View Post
    We had to demolish a parking lot that has a NBV remaing in order to expand a building. Is the NBV of the parking lot considered part of the new building costs?
    It is usual to write off the value of an asset that has been lost. How you treat this would depend on what development had been carried out to the car park. Was the acquistion cost of the carpark contained in the acquisition costs of the whole site or can it be separately identified? Are there additional costs for the carpark such as fencing, pavement, drainage that can be identified? You have not lost the underlying value of the land.

    What you are looking at is how material is the value in relation to the companies assets and earnings, in relation to the cost of the project and the overall site valuation

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