Advice required regarding depreciation

Diannew

An item has been purchased for a work shop, the invoice includes travel and setting up charges for the item, am I right in thinking the travel/setting up charges can be included in the depreciation charge for the life of the item.

Also on a different invoice from a different supplier, specialist tools have been purchased for the workshop some of the items only cost under £100 whilst others cost over the amount that we alow for depreciation over £300. Can the total of the invoice be depreciated as one amount or do I have to put through the individual items and only depreciate the one's over £300.

Thank you!!:001_tt2:

sarahwilson

Yes you would include the transport & setting up charges for the cost and depreciation of the item.

I'll be honest I'm not sure about the second half of your question!!

Diannew

sarahwilson wrote: »

Yes you would include the transport & setting up charges for the cost and depreciation of the item.

I'll be honest I'm not sure about the second half of your question!!

Thank you for your reply, hopefully some one can help me with the second one

princess246

You can only depreciate a tangible asset- travel costs etc are expenses and cannot be depreciated.

Monsoon

Princess, IIRC, set up costs of a fixed asset needed to bring it into use get capitalised, thus I agree with Sarah.

Re the second question I would only capitalise large items over your £300 limit.

Diannew

princess246 wrote: »

You can only depreciate a tangible asset- travel costs etc are expenses and cannot be depreciated.

I was under the impression that all costs associated to the set up of the asset can be included, I may be wrong.

Jason1312

Diannew wrote: »

I was under the impression that all costs associated to the set up of the asset can be included, I may be wrong.

Whenever I've depreciated an asset with additional costs, I've alway's taken the costs off the value.

It's like when a client purchases a Van with 12 months road tax, I've always been told to take the road tax off. Same with delivery costs of larger assets, such as kitchens etc.

Jase

A-Vic

Am i wrong in thinking one is a revenue expence and the other is a capital expense ? or am i totally off? The fixed asset then is treated as an asset but the costs are treated as an expense so the costs are shown in Profit and loss then the Asset is shown with depresation in the Balance sheet??

or is it like said deducted from the cost of the asset?

Sorry something simular am stuck with to

princess246

You only depreciate the cost of the asset i.e a car you use the cost of the asset not any costs associated.

How the hell do you depreciate an expense!

Diannew

Thank you for all your answere's I have just been on the internet HMC&R site to clarify my question.

It states that the cost of a fixed asset includes all the amounts to aquire the asset and any amount attributed to bringing the asset into working condition. These may include;-
Delivery Costs
Cost for preparing the site for installation
Professional fee's such as legal costs and architecture costs.
Stamp duty

It also includes a few others.

Thank you all again

Monsoon

Diannew wrote: »

Thank you for all your answere's I have just been on the internet HMC&R site to clarify my question.

It states that the cost of a fixed asset includes all the amounts to aquire the asset and any amount attributed to bringing the asset into working condition. These may include;-
Delivery Costs
Cost for preparing the site for installation
Professional fee's such as legal costs and architecture costs.
Stamp duty

It also includes a few others.

Thank you all again

Thank you! I'm not going mad!

Yes, it does seem silly to depreciate/ charge capital allowances on what would normally be revenue expenses, but the rules are clear - incidental costs of bringing the asset into use are capitalised.

Edit: I remember vehicle road tax being a specific example of this in my AAT course