Is a company's building always an asset?
submitted by priscilla

Arnold

If the company owns the building, it is the company's asset. If the building is rented or leased, it it not a company asset.

great bambino

It depends on how it's used, and how it's owned. Generally, if a company owns a building and uses it for regular operations, like an office or a manufacturing facility, then yes, it's classified as a long-term asset. You can put it under property, plant, and equipment (PP&E). It's an asset because it provides some sort of economic benefits.

However, if the building is leased then the building itself isn't an asset owned by the company. The building itself isn't really on the books. The lease is recorded though.

philly

If you think of the building as a long-term investment, it makes sense that it's an asset. It helps the company make money.

It’s interesting to think about how the value of a building appears on the books. When it's first purchases, it's recorded at cost. That includes purchase price, legal fees, and other related costs. Over time you'd need to depreciate the building to reflect wear and tear. Depreciation expense reduces the book value.

Market value isn't directly reflected on your books unless there's an impairment or revaluation. So, even if the market value of a building increases significantly, the carrying amount on the books might not change.