Advice required regarding depreciation

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:

Comments

  • sarahwilson
    sarahwilson Registered Posts: 567
    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
    Diannew Registered Posts: 2,814
    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
    princess246 Registered Posts: 49 ? ? ?
    You can only depreciate a tangible asset- travel costs etc are expenses and cannot be depreciated.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    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
    Diannew Registered Posts: 2,814
    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
    Jason1312 Registered Posts: 4 New contributor ?
    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
    A-Vic Registered Posts: 6,970
    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
    princess246 Registered Posts: 49 ? ? ?
    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
    Diannew Registered Posts: 2,814
    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
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    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! :lol::lol:

    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 ;)
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