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Minimum value for a fixed asset?

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This question has been asked many times but many of the answers are "if it's not at least £X, it's not worth putting it as a fixed asset" which I'm not sure is applicable for my use-case.

Let's say I'm running a limited company and I never make any large purchases, only lots of tiny ones that are less than £20 that have a useful life of 3-5 years such as switches/routers. My "assets" may have a total value of £3k but if we go on the principle of they are too small to put on the balance sheet, then my total fixed assets would be zero which wouldn't accurately represent the worth of my business. Now I completely understand larger businesses would have a higher minimum but what about the little guys?


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By Ruddles
08th Nov 2018 19:44

I would suggest, not being an expert in the market, that the second hand value of a bunch of switches and routers costing £3k would be considerably lower than £3k. And certainly have little or no impact on the value of your business.

Unless they are components of a larger asset I wouldn’t bother capitalising them.

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08th Nov 2018 20:32

Thank you for your response. Perhaps I did not articulate my question properly. Of course the value would drop but during that time I would be constantly purchasing more. So it goes back to my question again.

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By Ruddles
to MichaelRoss78
08th Nov 2018 21:04

You need to ask your accountant how he would suggest that you treat small items that are replaced on a regular basis.

I still maintain that assets of that nature, even if worth £3k, would have an insignificant effect on the value of the business regardless of how they’re treated. But your accountant, who undoubtedly knows your business better than I do, is the best person to speak to.

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to MichaelRoss78
08th Nov 2018 22:43

If you need to constantly buy more why is this?

How many does your business need in use at any one point in time?

Are they possibly not fixed assets?

Are they possibly consumables/stock for use?

At circa £20 each ,and possibly carrying £3k worth, that is a lot of routers, 150 to be exact.

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09th Nov 2018 10:09

"To small to put on the balance sheet" is not a principle, or a rule anyone needs to follow. Capitalise anything you like so long as it meets the definition of an asset, i.e. will have a useful life of more than a year. A colleague of mine once capitalised a mop and bucket and, to be fair, it wasn't wrong.

If I were your accountant though I would advise not capitalising these tiny items since I will spend extra time every period doing a fixed asset register and depreciation for 150 switches, which will cost you a lot of money, more than the £3000 showing on your balance sheet is worth to you.

Materiality in these things isn't a rule as such, it's more like a reminder to be practical.

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