The expenses incurred by enterprises in the renovation of rented houses and buildings shall be regarded as long-term deferred expenses, which shall be amortized in installments from the month following the occurrence of the expenses, and the amortization period shall not be less than 3 years. If the lease term is less than 3 years, it shall be amortized according to the actual lease term with relevant legal documents.

Generally, if the amount of decoration expenses is large, the amortization period is five years, and if the lease period exceeds five years, it will also be amortized for five years. The general decoration fee is amortized according to the time agreed in the lease contract. If the decoration can be used for 5 years, it will be amortized for 60 months. If you can get the invoice in a few months, it will be amortized according to the remaining time.

The amortization period of the decoration expenses belongs to the decoration expenses of the leased assets, which shall be amortized according to the lease term stipulated in the contract. In other cases, the amortization period shall not be less than 3 years.

What is long-term prepaid expenses?

Long-term deferred expenses refer to the expenses that the enterprise has spent, but the amortization period exceeds 1 year (excluding 1 year). Including start-up expenses, improvement expenses of leased fixed assets, major repair expenses of fixed assets with amortization period exceeding 1 year, stock issuance expenses, etc. The loan interest and rent payable in the current period shall not be used as long-term prepaid expenses.

An enterprise shall set up corresponding subsidiary ledger according to the types of expenses, conduct detailed accounting, and disclose its amortized value, amortization period and amortization method according to the expense items in the notes to the accounting statements. The accounting of long-term deferred expenses includes the accounting of fixed assets improvement expenses rented from operating leases, the accounting of fixed assets overhaul expenses, the accounting of fully depreciated fixed assets improvement expenses, and the accounting of other deferred expenses with amortization period exceeding one year.