Websites

sntowell

Hi,

I have a client who has purchased several websites, does anyone know how to deal with this correctly in the accounts, are websites classed as tangible or intangible fixed assets, and what is the recommended useful life?

Thanks

Baggybooks

What have they actually bought? Domain names or paid for websites to be created to advertise their business?

sntowell

they have actually bought websites that have been generated for them including the domain name registration with links on to google and amazon in order to generate an income stream from these websites.

Baggybooks

Advertising?

DaveP

If an income-generating website has been purchased then that is an intangible asset to be amortised over it's useful economic life.

sntowell

The websites have general information on say on the subject of golfing, football, food etc, a variety of different sites that all have links on to ebay and amazon. The websites aren't advertising the persons actual business as they don't have a website for there own company, if that makes sense.

If a viewer of the website clicks on an amazon link this then generates my clients income.

Hope this makes senses:confused1:

Baggybooks

It does now!

Poodle

Hi

Website costs are only capitalised if it can be shown that the expenditure will create an asset that has a long term benefit for the business. The website must generate sales or other revenues directly if the cost is to be capitalised. In your example this would appear to be the case were income is generated through 'clicks'

Treat the one off original design/cost of the website as capital and any other website costs such as monthly maintenance fees and updating of the site costs as revenue or just another trading cost.

I do remember reading that intangible assets have an assumed economic life of no more than 20 years, unless it can be proved otherwise. You will have to conduct impairment reviews on this as well.

If you are looking for tax treatment then BIM35870 is the place to go

Poodle