Small Tools - Asset or Expense - how to treat - The Book-keepers Forum (UK)

Sue T · Veteran Member

Small Tools - Asset or Expense - how to treat

Shamus · Forum Moderator & Expert

Hi Sue.

I would expense.

The assets seem immaterial (I assume the £300 plus VAT was the cumulative amount?) and would be completely covered by the entities Annual Investment Allowance anyway.

cheers,

Shaun.

-- Edited by Shamus on Saturday 27th of February 2010 07:31:06 PM

Sue T · Veteran Member

Thanks Shaun - much appreciated - there are three different tools at around £300 each plus VAT on same invoice.

Sue

-- Edited by Sue T on Saturday 27th of February 2010 07:32:48 PM

semsley · Guru

I wouldn't capitalise anything under £500.

Shamus · Forum Moderator & Expert

Hi Sue,

In the age of AIA I'm with Sheila.

Even though this is more than I originally thought as this is an ongoing business there's no recalculation of the amount of the £50,000 available to your clients business.

Expense them all (assuming there's not more than 166 of them!!!).

For future reference note that AIA is not applicable though for cars with over 120g C02 emissions.

kind regards,

Shaun.

Sue T · Veteran Member

Thanks Sheila and Shaun for your advice.

Sue

RobH · Expert

Interesting, my thought would be to capitalise at that value, true aia will mean it can be totally claimable against tax but that doesn't mean it should be treated as an expense, what if it was a piece of machinery worth £10,000? However there does need to be a cut off point at where we capitalise, I would normally look at the size of the business but more often than not I would capitalise above £150 to £200. It may be worth asking your clien't accountant to see what they advise.

lor · Guru

semsley wrote:

I wouldn't capitalise anything under £500.

I would probably say £150 or £200 would be a more suitable figure, I say this as I have purchased a new computer which cost about £298 including everything exept a printer(I didn't need to replace the printer I had at the time), which if you had a cut off at £500 then it wouldn't be put through as an asset, when it should be.

Shamus · Forum Moderator & Expert

Hi Rob,

your right... I must have just been getting soft at one in the morning.

At £300 you are right and it is still an asset of the company and should be included in the fixed asset register regardless of immediate write off.

So, to completely rewrite what I said last night, the treatment should be that the asset is written off in the year of purchase, pretty much making it the equivalent of an expense but instead of a direct expense it will just be that the 100% depreciation is included in the P&L as a depreciation expense for this year.... Quick mental note to self. Don't answer questions after midnight!

Anyway, more important things. How did the party go Rob? I notice that we didn't get any messages for a whole day so can I take it that you were a bit delicate yesterday?

Talk in a bit,

Shaun.

RobH · Expert

Hi Shaun,

Delicate would be putting it mildly...I apparently ordered an extra half a dozen bottles of wine that were left untouched...I am going to get a large amount of ribbing at wednesday morning's meeting, but it is rare that I didn't have to drive so I got a tad carried away. Spent most of saturday recovering...too old for this type of thing! Hope you had a good weekend?