whilst there's the old line in IAS16 about the costs of bringing the asset to the condition and location intended for use the fact that the asset was in use for a week before it went wrong puts me in full agreement with your appraisal of the scenario Bill.
Seems that this acquisition proved to be a bit of a false economy when one adds into the equation five months using another car (did he have to also buy that one?).
Hows the client consolidation going? Did you decide eventually to retain your existing stable or did you push ahead with the reduction?
Anyway, hope you are well and talk soon,
Shaun.
p.s. Sorry Tim, wasn't ignoring you. You must have posted just as I started writing. Sounds as though we are all in agreement though.
p.s.2. Definite Dallas Theme to this thread.
-- Edited by Shamus on Saturday 1st of September 2012 01:41:00 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hi All, thought I would pop back in and try and catch up on whats been goin on.
While I'm at it i thought I would get your opinions on a client situation. Nothing to difficult, and I am pretty sure that I know the answer.
The client bought a car at auction for £6K, two weeks before his financial year ended (31 March). Had the car a week when something terminal happened to the engine.
Took it to a local garage, who struggled to locate the fault. Five month later!! got the car back with recon engine, new turbo, new exhaust, and various sensors (guess work diagnosis but that's by the by). Around another 3K to get it road worthy.
My view is that the purchase of the car is capital, and allocated to previous years accounts, with any tax allowances taken in 2011-12 SA. The repairs will be a revenue expense in the current year, and claimed against the financial accounts, as a normal expense. He intends to sell the car ASAP, and may or may not make a profit on the sale (against the original purchase price/ NBV).
Just to clarify. The car was bought as an asset, to be used, not bought with the intention of selling for profit. The client is a sole trader.
Hi Bill, hope things are going well in your new work regime. Crossing fingers that you'll take the plunge and get help to juggle all your clients. My other half is doing well since her redundancy last summer. She is completing jobs 90% of the way for part-time - self employed, for example. It's a little different because I'd been showing her bookkeeping etc on and off for some years prior, but she's taken to TaxCalc better than I have and is earning her corn.
I'm with you entirely on the Capital / Revenue treatment of the car and repairs.
Not necessarily relevant but I sometimes hesitate about claiming 100% AIA. With no capital allowances left, clients can pay more overall tax, even if they get a tax holiday in the first year, especially if a vehicle is sold for more than they paid for it.
