Depreciation of an asset

What assets can be depreciated

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Hi everyone, 

I have a client who owns a small firm (turnover £70k) and he recently bought a phone worth £660. He insists that I should use the phone as an expense and not depreciated it as an assett. What would you recommend? and what is the best way to depreciate it? Thank you!

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By Moonbeam
30th Oct 2019 14:03

Speak to his accountants about their policy on this.

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By Yeadonian
30th Oct 2019 14:20

Most companies will have a 'de minimis' capital threshold, below which items are treated as revenue expenses rather than capital items, even if technically the items meet the definition of an asset.

This is a matter of judgement for the directors of the company. Presumably in this case the owner is also the sole director, and therefore he can set a capitalisation policy to say that small items like this phone are to be treated as revenue expenses, as long as he is consistent in applying it.

If you do end up capitalising it, the depreciation policy should be based on the estimated useful life of the asset. Again, this is a matter of judgement.

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Replying to Yeadonian:
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By juleis
30th Oct 2019 14:40

Thank you so much!

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Red Leader
By Red Leader
30th Oct 2019 14:37

I think you'll find that the correct spelling is "deprecation".

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By ireallyshouldknowthisbut
30th Oct 2019 14:42

Don't worry about it, leave it for whoever does the year end and tax to sort.

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