How to Record Monthly Depreciation on Restaurant Leasehold Improvements
Expensing one month's depreciation on the restaurant fit-out asset over the lease term.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Depreciation Expense (Fit-Out) | Expense (+) | 417.00 | - |
| Accumulated Depreciation (Leasehold) | Contra-Asset (+) | - | 417.00 |
💡 Accountant's Note
A JOD 25,000 fit-out over a 5-year lease is depreciated at JOD 417/month, reflecting the true monthly cost of the physical restaurant setup.
Practitioner & Systems Framework
💻 ERP Architecture
Set up the auto-depreciation journal in the fixed asset module once the fit-out is complete and the restaurant opens. Depreciation begins when the asset is available for use — typically the restaurant opening date, not the construction completion date. Review the useful life assumption at each year-end — if the lease is extended, the depreciation period can be extended to match.
⚠️ Audit Flags
Auditors verify the depreciation period does not exceed the remaining lease term. If the lease has 3 years remaining but the fit-out was depreciated over 5 years, the asset is understated at the end of the lease. Also check that depreciation began on the correct date and that the accumulated depreciation balance is mathematically correct.
📄 Required Documentation
Fixed asset register entry (cost, useful life, depreciation start date, monthly charge), lease term confirmation, accumulated depreciation roll-forward, and year-end useful life reassessment.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.