Here is an example of a situation, the idea is the understand the difference between the two.
So, let’s say a limited company running a service business, but It also sell products.
I buy 4 medical equipment, 5000 each. and use one as capital asset in company but keep rest three in stock for sale.
One is marked as capital asset in FreeAgent: It has 2 years life, marked as AIA and I can see the depreciate value per year in balance sheet.
Now let’s move to marking the rest three three as stock:
o The expense of the stock items, is it considered as balance sheet (capital cost) or profit and loss (revenue cost) item?
o How does depreciation value work for them over years? Let’s say the stock items are not sold for three years.
So, let’s say a limited company running a service business, but It also sell products.
I buy 4 medical equipment, 5000 each. and use one as capital asset in company but keep rest three in stock for sale.
One is marked as capital asset in FreeAgent: It has 2 years life, marked as AIA and I can see the depreciate value per year in balance sheet.
Now let’s move to marking the rest three three as stock:
o The expense of the stock items, is it considered as balance sheet (capital cost) or profit and loss (revenue cost) item?
o How does depreciation value work for them over years? Let’s say the stock items are not sold for three years.
Comment