I've read in other postings that tools (e.g. Expensive Power Drill) over a certain value should go into NC 0020 - Plant & Machinary and depreciated. Tools under this value (e.g. Hammer) should go into NC 7800 - Repairs & Renewals.
If this is correct what is the golden figure, in my day job I work for a much bigger company and they only capatalise equipment over £250, but what is the general consenses for a Landlord with a small portfolio, and what are the benefits to increasing this value or lowering it?
One of my guys I capitalised anything over £100, this is what accountant told me to do, anything under that goes to small tools expenses. I supposed it depends on the business etc. Do you mean an expensive power drill that he uses for repairs on the houses that he manages?
Others on here may say over £200, I think it just depends on the business to be honest.
Hopefully Shaun will be on here to give his take on it.
I'm with you Amanda. What is capital as opposed to what is a revenue expense is very much down to the significance of the expense to the business.
The general rule is that where an asset is used by a business over more than one period then it should be capitalised but the reality is who would ever capitalise an office stapler yet those often last longer than computers.
The other thing to consider is that the item to be expenses may in itself be insignificant but may also form in aggregate part of an asset to be capitalised.
For example. A single spanner would be expensed though small tools expenses due to its insignificance but a full workshop chest of spanners would like as not be capitalised.
For capitalised power tools I would write them off over four years.
kind regards,
Shaun.
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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.
