Written down value depreciation monthly posting

WDV Depreciation monthly

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  • Hi Kindly let me know , in written down value depreciation, depreciation is entered only once at the end of particular year or occurance of purchase/sale event. Can we enter the written down value depreciation cost everymonth by caryinbg forward the remaining value to next month and continue it doing every month, applying depreciation per method specified under wrtitten down value.

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RLI
By lionofludesch
08th Jul 2020 10:35

If you want.

That will then become your accounting policy, which might look a bit strange.

A more practical approach might be to charge a twelfth of the annual charge, based on the NBV at the start of the year, every month.

But it's up to you.

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Routemaster image
By tom123
08th Jul 2020 10:51

Agree with Lion. Generally, for management accounts, you are often looking to keep things as level as you can, within reason.

Depreciation is a sunk cost, so you don't really want much variation each month. So, whichever your annual policy is, I would use 1/12 of the value each month.

Try not to get too hung up on tax, either. There is more to accounting than trying to mimic a once a year set of financial statements.

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By Paul Crowley
08th Jul 2020 10:52

Agree all, pointless task. Do it once a year

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Replying to Paul Crowley:
Routemaster image
By tom123
08th Jul 2020 11:15

Depends on the audience, though?

Pretty sure board reports would be expected to include the item.

SME, with a non finance owner, keeping things as near to 'cash' is probably suitable.

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Replying to tom123:
RLI
By lionofludesch
08th Jul 2020 12:44

tom123 wrote:

SME, with a non finance owner, keeping things as near to 'cash' is probably suitable.

No SME has ever asked me to provide management accounts.

Nor, for the avoidance of doubt, have they produced them themselves.

You're lucky if you can keep them interested for half an hour once a year to discuss the annual accounts.

They just go on "is there enough cash/overdraft to pay this month's bills ?" and "has anybody been taking too much credit ?"

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Replying to lionofludesch:
paddle steamer
By DJKL
08th Jul 2020 13:01

I am the opposite- my current employment actually came about because in 1997 my current employers wanted me to come in and do management accounts etc for them (I was recommended by the outgoing accountant who was emigrating ) so the firm I was then with billed me to them re this service. There was also SC60s and monitoring of a construction project within one of the entities so this then led to two days a week and once it hit three days in 1999 they instead offered me a full time job as that was cheaper than paying my firm's fees; the rest is history,I have been here since.(though now on paper back to three days a week)

I also over the years did some other management accounting for other SME clients, I can certainly recall a fireplace supplier/quarry/stone merchant, a travel agent and a sheet metal fabricator, it tended to be in a sweet spot where turnover was maybe in the say £800k to £2 million mark and they were just not yet big enough for a full time in house accountant.

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Replying to DJKL:
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By Southwestbeancounter
08th Jul 2020 14:42

SC60's - now you're talking! You'll be mentioning the National Insurance stamp next! LOL!!

Those were the days - you could even ring up and speak to an actual tax inspector at HMRC then too!!

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Replying to Southwestbeancounter:
paddle steamer
By DJKL
08th Jul 2020 14:53

SC60s also had issues and we were less conscious of self employed/employed status back then. I ended up dealing with an employment status review- from memory I ended up conceding the labourers as employees but I got most of the trades as self employed. I recall the sticking point was the roofers but as they were paid by area covered HMRC backed down. It could have been expensive as total build cost was circa £1.4 m and labour was a tad over half that, probably circa £800k; think I settled for £25k-result.

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