Equipment Purchases - Expense or Asset?

[staffsuk]

Hi again :redface:

I have a question about a few purchases and whether they are expense or assets...

I'm a Sole Trader - non VAT registered with a very small turnover...

OK first up is a set of postal scales I use for weighing parcels in order to accurately price postage fees. They cost £35.

Second is a used Brother Laser Printer - bargain at £40!

Third is an electronic Multimeter. I use this to fault find and test items I then sell on. That cost £50.

How would I class these and under what accounts in the chart should I allocate them?

I'm using Accounts Portal.

Thanks! :D

[elainec100@cheapaccounting]

all of these are expense items not assets

[staffsuk]

Hi Elaine

Thanks for the reply :)

So I will log the Printer against 'Printing & Stationary' but where would I pop the Scales & Multimeter? Should I log them against 'Misc Expenses' or alter 'Postage Charges' to 'Postage' for the Scales and create one for the Multimeter which could be used for other Tool purchases? If so what would I call it?

Or are they 'COS' as I need them in order to follow through a sale?

Thanks again all!

[elainec100@cheapaccounting]

Misc expenses is fine. TBH it doesn't matter that much really.

[staffsuk]

OK Thanks Elaine :)

[robindunne]

Ask your accountant (if you have one) about Annual Investment Allowances (AIAs). Small businesses can write of all capital expenditure in the year of acquisition up to 50k/100k - depending on when you did it.

Can do wonders for a tax credit award if you have large asset to buy.

[elainec100@cheapaccounting]

AIA is not relevant to the OP question given the size of purchases made

[robindunne]

I gave the advice about AIAs just in case any small business is reading this and worrying about pooling assest, capital allowances TWDV etc....

If the OP knew about AIAs they would not even ask the original question.:)

[KM-Tiger]

If the OP knew about AIAs they would not even ask the original question.:)

Yes and no, as who wants to maintain an Asset Register full of hundreds of trivial items and do the necessary depreciation etc.

The real question is where the cut-off is. It's been discussed here before without firm conclusion, though I do recall my suggestion of £500 raised a few eyebrows. Materiality was mentioned which I think means the limit should be assessed in relation to turnover and average transaction size of the business.

It remains an interesting question for small businesses: at what upper limit must one capitalise?