Fixed Assets

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Frankie1976
Frankie1976 Registered Posts: 33 Regular contributor ⭐
Hi,

Could someone clarify something for me to make sure that what I am thinking is correct?

For example, if a company had capitalised an item say a fax machine over ten years ago and have recently purchased a new machine to replace the old one because it was no longer working, but the cost was a revenue cost, what should happen to the old asset on the FA register?

I think the old machine, if no longer in working order should be disposed of and taken off the register. However I have been told that because the original fax machine was capitalised, and the new one a revenue cost then the fax machine on the register should stay, because a fax machine still exists on site.

Some comments would be much appreciated.

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  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 Dedicated contributor 🦉
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    Hi Frankie
    Was the cost a great amount ten years ago? If the fax machine no longer works I would expect it to be scrapped and removed from the register, it will have been depreciated in the accounts and after ten years I'd be surprised if there was any value left on the balance sheet. As to keeping it on the fixed asset register, they are different machines with different serial numbers so not the same thing. If the new purchase cost a lot less and therefore under the value that you normally capitalise items then it will just go through the P&L.
  • Frankie1976
    Frankie1976 Registered Posts: 33 Regular contributor ⭐
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    Thanks Anne,

    That's was my original train of thought.
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