Expensed equipment on incorporation

Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
If a sole trader incorporates, and owns, say, £6000 worth of small tools, what happens to them? Obviously the ownership is transferred over to the Ltd Co. However, being lots of tools of low value each, they've all gone through the P&L over the years, as opposed to being capitalised on the balance sheet.

Does a sale or accounting entry need to be made? If they were on the balance sheet/ capital allowances claimed, something would happen to them. Or can you just ignore them because they were revenue? After all, you wouldn't count up every paperclip or stationery item, so do you just draw a line at capital/revenue even if there is a material value in revenue goods on hand at incorporation?


  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Meh. There is a balance in the main capital allowances pool. The previous accountant to me (last year) didn't do a balance sheet so tools that should have been capitalised (by virtue of them being in the pool) weren't put on the non-existent BS, and just (presumably) not included in the P&L. Sigh.

    I'm still interested in the answer, though.
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    If you want to bring them in at a value in the company then you have to take them out at a value in the old sole-tradership. This will either be as a credit to the capital allowances general pool or a credit to the P&L.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Thanks Dean. I'm happy with that now I've found the pool, thats straightforward (but I can't help thinking there ought to be something on the Bs in respect of them).

    I'm still interested in what the right thing is to do for genuine expensed equipment though, even though that now doesn't apply to this one.
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