If a company leases a new building, pays $300,000 for a shop fit out to a builder.
To work out the depreciation, per Division 43, I would have to work out the construction costs not the cost incurred ie ($250,000 with a 20% markup to the $300,000 selling price).
Thus, my depreciation would be 2.5% of 250,000 a year, correct?
I'm aware this is how it works for owners when claiming depreciation, just confirming this is the same for an entity which doesn't own the building.
The second part would be if after 5 years the tenant decides to move and gifts the fit out to the owners the balancing adjustment that would occur would be of the total value (costs incurred) - depreciation claimed?
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