Capital or revenue?
‘PC’ disclosed that he or she had purchased a new network of server and 4 PCs about four years ago at a cost of £10K. The server and one of the workstations had recently had to be replaced at a cost of £2,750 and £400 respectively.
Should this expenditure be treated as renewals and debited in the profit and loss account, or should it be dealt with in the capital allowances pool? PC had read somewhere that capitalisation was the correct treatment.