What Do You Do in Accounting With the Value of a Demolished Building?

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The value of a demolished building always requires you to keep a few particular things in mind, especially when it comes to accounting. Find out what to do in accounting with the value of a demolished building with help from an accounting professional in this free video clip.

Part of the Video Series: Accounting & Finance
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Hi, I'm Lori Greer from Atlanta, Georgia, and I'm here to talk to you about what do you do in accounting with the value of a demolished building. In a situation where land is already owned and contains a building that has been declared to have no further use, the building would be deemed as an impaired asset. An example would be if the building is declared unsafe or is no longer needed for operations. At that point a decision is then made to demolish the building for safety reasons and the land left cleared. The building's Net Book Value should be written down to zero and the cost of demolishing such a building would be charged to expense and incurred. In another situation when land and building are purchased and at that time the building is not intended for use and will be demolished, those building demolition costs should be capitalized as part of the acquisition cost of the land. These would be necessary site preparation costs to prepare the land for its intended use. One more scenario would be when an existing building is being demolished for the purpose of constructing a new building on the same site. The Net Book Value of the existing building should be written down to zero. The demolition costs should be capitalized as part of the cost of the new building as these costs are attributable to creating the new construction project. Again, I'm Lori Greer from Atlanta, Georgia and that's what do you do in accounting with the value of a demolished building.

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