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thinkofaname
6th August 2004, 14:34
In terms of ££ value only, when is a company purchase classed as an asset?

ie my company buys a computer for £1,500 - it shows up as an asset.

However if my company then buys an el cheapo printer the next week for £60, is this also an asset, or is there a capital value threshold, below which the purchase can be classed as an expense.

Darren at 1st Accountancy Serv Ltd
6th August 2004, 16:35
Your laptop would be expected to last a few years, and is therefore classed as an asset and written off using depreciation. On the other hand your cheapo printer isn't expected to have much of a shelf life and can therefore be written off in the accounting period it was bought.

Accountants have various "limits" at which they would classify an item as an asset, it can vary from firm to firm. But in general, this "limit" depends on what is deemed material in the context of the accounts and what size of company you are.....for example, a £1500 laptop would not be material in the context of BP's figures but would be in a contractor's accounts.

Is this a bit clearer?

xoggoth
6th August 2004, 17:17
Quite true. Think there is some technical distinction between capital and current expenditure to do with whether or not it is intended to have a lifetime of more than one accounting period but in practice the smaller items are usually just bunged in current expenditure and the IR do accept the practice.

Personally I always put down even £2 mini staplers as capital just for the shear joy involved in calculating capital allowances and being able to lend the government some more of my money to support all those great projects of theirs but that's just me.