Advice needed, as we have an aging mail server in the office that was a year old when we bought it and we are depreciating this in books at 33% per year, but need to replace this now with one year left of the three it would take to write down to zero.
Basically the server is now three years old and most know any three year old PC tech is almost redundant and we have outgrown this server as we bought it second hand at start-up of business two years ago for only £1,200.
Issue is that we have been depreciating this and other PC's laptops at 33% flat (can't remember who suggested) and the server is therefore sitting on balance sheet with a value of all of £400 now, but we want to replace it in next month or two.
What is best way to handle this, as the server will have zero real value now if we try to sell (low spec three year old tech without operating system as we will need license for new server)...
Do we need to try and sell it and show sale of the asset, or can we just write it off in balance sheet somehow?
At the end of the day depreciation is just an estimate to expense an asset to the profit and loss account over its expected useful life so as to match it against income which it is generating.
If any asset at any time is deemed to be worthless then in the spirit of prudence it should be fully written down in that year to the profit and loss account ie
