I bought a new PC which I will be capitalising. I also bought 2 monitors (and a keyboard) separately via a different supplier - I am thinking of including these items in the cost of the 'PC' and capitalising them too. Just wondered if I was on the right lines
I'm sure saw a great post on here the other day which I thought might help me with this one but now I cannot find it!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
If you wanted to capitalise a pencil sharpner you could (although I cannot imagine anyone doing that).
For this purchase the assets are effectively seperate but you have bundled them as a single asset.
There would be no issue with that.
I think that the other post was Nadia's.
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.
Hi Shaun Ah thank you for that, Ive bundled it as you suggested.
I did get some information from Nadia's post the other day but I recall now that I saw it in an Accounting textbook. There was comment also that you could capitalise the wages of people who were involved in the installation. Would I be pushing it to include some of the wages of the staff member who I got to source and 'install' it? Or is that really for installing big plant and the like?
Thanks again Jo
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
that's an interesting and quite timely follow up question which emphasises some of the things that people need to be aware are changing moving forwards.
Under the old FRSSE capitalisation of labour incurred directly (emphasis on directly there) for instalation of the asset was a permitted approach.
Under FRS105 it is not, with all costs associated with the asset being expensed.
However, if one prepares accounts under FRS102 then such directly attributable costs would be a permisable approach
That actually reminds me. I must sit down and find time to read FRS102 and FRS105 end to end as I keep dipping into them but I'm as guilty as many others here that I have not yet read the standards cover to cover where I know that we all should as they are a fundamental change to the way UK GAAP works (very much a further step towards full IFRS convergeance).
All the best,
Shaun.
p.s. lost in the above is my answer that I would expense the labour cost associated with the instalation as I would assume that you will be preparing the accounts for this year under FRS105 rather than FRS102 (and last year would have been under FRSSE although that bits not relavant to the answer, just included to emphasise that things are changing).
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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.
Hello again Shaun It was only as I went to bed last night that I wondered if my text book might be a wee bit out of date with some of it's standards given it has VAT at 17.5%!! Certainly well before all the GAPP/FRS changes and I am very guilty of having not read about it all, despite having saved a ton of stuff about it to my favourites. I did consider it never affected my role, just with doing the bookkeeping up to TB, but it's easier if I get that part in the right place for the Accountant (one less question for them at year end).
Oh and don't go reading that today, it's Sunday so I'm sure you have other things to do that are more enjoyable, no I don't mean reading Tolleys from cover to cover.
Thank you for the help on this one, especially the links. Mucho ta.
Jo
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
its unfortunate but even some of the latest study texts have not been updated to reflect the changes.
Of course, thats not surprising when we are still getting new releases of the standards (FRS102 was reissued in September, FRS105 is from July).
Of course, this means that those taking exms at the moment will like as not be tested on standards that will not be applicable (or even in existence) when they use that in the real world.
Its a common mistake that its believed that bookkeepers do not need to read the standards as thats accountants territory. However things that are changing do very much affect the way people need to keep books and records.
One that springs to mind for me is inventory in that under the old UK GAAP LIFO was a permitted approach, however under IFRS on which the new UK GAAP is based that is outlawed completely as it's only purpose was earnings management.
The one concession that UK GAAP has over IFRS that I'm glad about is that micro entities (those under £600k turnover) are not required to prepare Cashflow statements where under IFRS they are.
I really do need to read all of this properly but at best part of 500 pages thats a serious commitment of time that I don't have at the moment.
What we really need is a chip fitted... Or Joe 90's glasses... where we can just upgrade our knowledge bases without all of this having to unlearn what we know in order to move forwards.
Right, that was fun, now back to wallpapering my floor with receipts and invoices.
Laters.
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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 Shaun
Most of the study texts havent even managed to update the simplest of changes that was around discounts, so you have no chance with such a big change!
You could do with someone putting it all on CD for you so you can listen to it whilst you are asleep or in the car on the school run, although liking Joe 90s glasses idea and reckon they would suit you!
Watch out for those stray staples, could do your toes some damage!
I am off to read (some of) those links -reckon I could be snoozing in about an hour!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I'd be looking at the cost of each item.. I'd put the keyboard to the PL, and if the monitors are replacing old ones, and/or under say £100 each, I would write these to the PL as well. If you dont have much in the way of PC costs on the PL, it wont look whacky.
If you wanted to capitalise a pencil sharpner you could (although I cannot imagine anyone doing that).
I think the bookkeeper before me with one client might have considered it. Turnover of about £800K and they capitalise a label printer for £79. I didn't even capitalise the label printer in my own accounts and my turnover is a fraction of the size. I wouldn't bother with anything under £150.
On a similar subject - I noticed a lot of the assets for this client have been depreciated down to leave them valued at £1. Even the label printer.
Is this normal? Have I been doing it wrong?
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