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Post Info TOPIC: New Website Asset - Depreciation Treatment
laura


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New Website Asset - Depreciation Treatment
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Hi,

The company I work for has invested £10k in a new website.  It's an online retailer and so the website cost has been capitalised and is being depreciated over 3 years. 

However, we have only been trading for just over a year and the initial website, which was expensed last year, was re-classified as an asset at year end with a view to fully depreciate it before the new website comes into use.  The problem I have is that the initial website cost us £7k and it's a huge amount for us to depreciate as we are still making losses on a monthly basis.  Also, the 'background' information (ie product details and customer details etc) has been transferred into the new website.  Can we carry forward a proportion of the old website costs into the new website?  IE- £5k was wrote off at year end, can we take the £2k left and depreciate it over 3 years with the £10k for the new website?

Hopefully I have explained this clearly!

Thank you in advance for your help.



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MarkS


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Laura

Technically the old website should be written off in full when the new one is brought into use as it wont have any value.

But from a pragmatic viewpoint if I was your accountant I wouldnt have any issue with you capitalising £12k and writing off over 3 years.

Regards

Mark



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
laura


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Thank you Mark- thats great

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