depreciation

[Leah Smith]

Currently setting up a business im new to this side is of the business, I'm need of advice on the depreciation of some assets that I have purchased. How to depreciate assets? What are the rules on each item I need to depreciate? Any advice welcome. Thanks

 

[Scalloway]

To put it simply you depreciate assets over their useful life, bringing their value in your accounts to zero or the expected sum you will get when you have finished with them. Some assets, like computers, lose their value pretty quickly. Others will still have a second hand value even when you have no use for them.

This article gives a lot more information.

http://accountant-preston-lancashir...ntancy/fixed-assets-depreciation-amortisation

 

[MyAccountantOnline]

Currently setting up a business im new to this side is of the business, I'm need of advice on the depreciation of some assets that I have purchased. How to depreciate assets? What are the rules on each item I need to depreciate? Any advice welcome. Thanks

Can I ask why you want to account for depreciation? Is it for bookkeeping or to claim tax relief?

 

[Chris Ashdown]

One thing you need to watch is appreciating value

My friend had a flying school using Cessna C152 aircraft the most popular basic training aircraft

He brought them at a good price second hand in the 1970's and depreciated them over i think about 7 years. In the 90's he sold them as he was packing up and they had quadrupled in price as no longer produced and he had a large tax to pay

Not many items appreciate over time but some do and you pay tax on the profit

 

[MyAccountantOnline]

One thing you need to watch is appreciating value

My friend had a flying school using Cessna C152 aircraft the most popular basic training aircraft

He brought them at a good price second hand in the 1970's and depreciated them over i think about 7 years. In the 90's he sold them as he was packing up and they had quadrupled in price as no longer produced and he had a large tax to pay

Not many items appreciate over time but some do and you pay tax on the profit

An asset which increases in value can give rise to a tax charge but it's not depreciation which creates a profit. Depreciation isn't an allowable expense for tax purposes.

 

[Chris Ashdown]

Agreed but the way he looked at it was its depreciated value was £0 and then he had to pay full tax on the new value out of what was going to be his retirement money. he thought the tax would only be on the increase from purchase price to sell price not understanding that you don't get two bites of the cherry

 

[Daugela]

Hi, depreciation is like recording “wear and tear” of assets in the accounts, depends on the type of asset; depreciation policy is usually determined by the company.

Please note, this is a simplified description.