repairs or equipment

repairs or equipment

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We as a firm do not capitalise small items of equipment where the cost is less than a £100. The financial controller for a new client tells us he doesnt capitalise anything under £1000 and that this is reasonable given the size of the compnay (assets 2m,turnover 4m)

what do you think?
simon

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By martinfoley07
09th Jun 2006 16:51

accounts and tax
For accounts purposes, it really is a question of following your judgement and materiality.

Don't forget that for tax purposes, strictly speaking there is NO de minimis!!! In practice, should not be that difficult to argue small value items are not a capital asset in practical terms. But of course if the Inspector is scratching around .....!!

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By AnonymousUser
09th Jun 2006 16:45

Writing off assets
I am tempted to say follow the Institute guidelines but I won't.

If its likely that it will not last more than a year then write it off in one year. If its going to last longer then put it in fixed assets if its over £300. If there are quite a few under £300 I would put them to fixed assets if the business is small. If its a large company I would write them off.

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By Richard Willis
16th Jun 2006 09:55

Surely it's a question of materiality
I was told, many years ago, that ICI did not capitalise cars! This was because they had so many that the turnover meant that any attempt to depreciate them would make little or no difference to the P&L.

We use common sense. Anything < £250 is usually w/o, but computer equipment we capitalise regardless because it sort of represents additions to the whole setup which we bought in one go some time ago and, obviously, capitalised at the time.

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