Facilities expenses may include the expenses for acquiring new facilities and ongoing maintenance, rent and other expenses for existing facilities. These expenses are usually part of fixed overhead costs, which companies incur regardless of the level of business activity. Depreciate or allocate the acquisition costs of a facility over its useful life. Ongoing facilities expenses are usually a part of the operating expenses section in the income statement, which shows the revenues, expenses and profits for an accounting period.
Determine the depreciation expenses for newly acquired or constructed facilities. According to Steven Bragg of the AccountingTools website, the useful life of commercial properties, such as office buildings and stores, for tax reporting purposes is 39 years as of the date of this publication. A common depreciation method is the straight-line method, in which the depreciation expenses are the same each year. For example, if you buy a new office building for $300,000, your annual depreciation expenses are about $7,692 ($300,000 / 39).
Determine the costs for furniture, fixtures, renovations and other items necessary to get a facility ready for use. You may be able to capitalize some of the renovation costs, which means you can include them in the cost of the building, but you have to depreciate furniture and other fixed assets over their useful lives. The useful life of furniture and fixtures is seven years, according to AccountingTools.
Add up the rental costs of all non-manufacturing facilities, such as retail stores, distribution centers, customer service centers and office space. According to Harold Averkamp of the AccountingCoach website, you should include some of the manufacturing facility rent in the inventory calculation. The cost of goods sold is equal to the beginning inventory plus purchases minus the ending inventory.
Estimate other facilities expenses, such as maintenance, utilities, landscaping, security and insurance. Your company may have separate accounts for some of these items, in which case you would list them separately on the income statement, or you could combine them into one account. For example, you could combine landscaping and snow removal with facility maintenance expenses.
Calculate the total facilities expenses by adding depreciation expenses, rental expenses, maintenance, security, insurance and other facilities expenses.