Accountancy Conundrum 1

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Does anyone have any thoughts on this situation?

When posting your normal mountain of purchase invoices you come across three invoices that relate to fixed asset acquistions but you judge them each to be immaterial (cost £100 to £200) and therefore you post them as a repair & renewal.

However later you come across a material[/u} invoice (say £1600) for a number of fixed assets that are in themselves not material (again between the £100 to £200 mark).

What do you do? Do you judge the previous invoices, in retrospect, to now be material or do you treat the material invoice as immaterial due to the immateriality of the items involved?

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1

    unless it was for a company that made dresses, i think it would all be immaterial.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1

    Material in accountancy terms means how significant.

    For example an item of plant and machinery valued at £100 could be classed as repairs and renewals as most companies have a threshold as to what they capitalise. I generally do not capitalise if it less than £150.

    In answer to the original thread if it is a culmination of immaterial items on one invoice (computer equipment is usually like this) then I generally capitalise as the compontent parts usually make up a number of fixed assets.

    If it is just a one-off and below £150-£200 then you can get away with putting it to repairs and renewals. Usually you would make judgement as to what the asset is in the first place and the impact (materiality) it has on the financial accounts.

    Kind regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1

    Hi,
    I have a similar conundrum. I am helping my friend fill in her first tax return over £15000, and have come across an item that is £300, should I capitalise this? The reason why I ask is because she is going on maternity leave in October and is thus winding up her self-employed business. She's not sure if she will start up again as she is probably leaving the country in the next year. (FYI: the item is a foldaway bed/table - she is a beauty therapist)
    Any advice would be greatly appreciated.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1

    I would normally capitalise such an item. I presume the tax return you are doing is for y/e 5 April 2007. In this case (presumably it's a whole tax year) I would capitalise it and claim the 50% first year allowance.


    Kind regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1

    Hi, Thanks for the advice Steve, much appreciated. :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1
    Richard1988 wrote:
    unless it was for a company that made dresses, i think it would all be immaterial.

    :lol:
    Richard 1988 that's quality... except I choked on some pasta laughing. keep it up :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1

    had you in stichs did i?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1
    unless it was for a company that made dresses, i think it would all be immaterial.
    Richard 1988 that's quality... except I choked on some pasta laughing. keep it up
    had you in stichs did i?

    Is this the level of wit expected on the AAT forums.
    Where flippant remarks such as those above have people choking on their pasta.

    Notice that neither had anything remotely knowledegeable to contribute.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1
    Shaw4000 wrote:

    Is this the level of wit expected on the AAT forums.
    Where flippant remarks such as those above have people choking on their pasta.

    Notice that neither had anything remotely knowledegeable to contribute.

    Shaw, get a grip.

    I'm sorry that after just 2 posts yourself, you feel that you're an expert and have the right to suggest others don't have sufficient knowledge to post, based on their 'level of wit' alone.

    Was just having a laugh, no need to get ratty.

    And yes, Richard, you did have me in stitches :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1

    Hi
    You made me laugh which isn't that easy.
    Thanks Lorri :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accountancy Conundrum 1


    Blimey, it took me weeks of being a regular poster before I'd built up enough courage to have a public tiff with someone!

    I think Shaw's anger was in response to Richards flippant comment being the first one made to what was quite a sensible question. Bearing in mind this was Shaws first ever post and to straightaway get a throwaway remark, probably justifiably made them wonder about the integrity of the Forums.

    However, as I have said before, I do like the 'colour' that various people add to these boards no matter how inappropriate it may seem at times to others. Nor should people be judged on the negatives of the occasional careless comment (as I often am), but rather on the overall positives we frequently provide.

    Regards,

    Robert

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