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Post Info TOPIC: Accounting for Plant and machinery (introduced to business from hobby) in 1st year of business
blueeyes


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Accounting for Plant and machinery (introduced to business from hobby) in 1st year of business
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Hi,

A client had a hobby that she has now set as a business. The kiln she introduced was 2 years old and she expects it to last another 2 years.

Is the fair amount 50% of the purchase cost? Also how do I account for this please?

Thanks in advance



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Shamus


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all equipment brought into the business should be recorded as though purchased on the first day of trading.

Bring the equipment in at purchase price based on the receipts that the client must have for the equipment then devalue in the normal way over the remainder of the useful economic life.

I note that you talk about a kiln only having a further two years useful life expectancy but is that the kiln or the lining?

If the lineing then it should be depreciated seperately from the kiln (same as an aircraft is depreciated separately from the aircraft engines as they have different useful lives).

HTH,

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.
blueeyes


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Thanks for your reply. After speaking further with her she has now advised that she is going to sell it and purchase a new one. So the purchase price of £450, do I use 25% WDA for the year is was used?
Kind regards

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