is a brand new office chair capital expenditure ?

topcat

I am thinking it would be but Kaplan books states it is Revenue Expenditure but can not work out why ?

steve2008

imo, it would depend on the business and their use of the materiality concept.

I imagine most businesses would not bother considering a chair as a capital expense due to the relatively low value of it. i.e. it's not 'material'. Usually questions like that come with information regarding what the minimum cost would have to be for an item to be considered a capital expense.

(Not long finished studying AP1, yet to take the test)

topcat

steve2008 wrote: »

imo, it would depend on the business and their use of the materiality concept.

I imagine most businesses would not bother considering a chair as a capital expense due to the relatively low value of it. i.e. it's not 'material'. Usually questions like that come with information regarding what the minimum cost would have to be for an item to be considered a capital expense.

(Not long finished studying AP1, yet to take the test)

thanks Steve , you have reminded me of the material concept which i completely forgot about . There was nothing in this question to outline the minimum cost but i think you are correct.

Kris1990

Hi topcat

At work we have a capital limit of £5,000 so anything over £5,000 is classed as capital with a few exceptions (maintenance contracts etc) and anything under £5,000 is classed as revenue, the same will apply here.

blackviper90210

I would list it as office equipment.

We list anything over £1000 as an asset, but we are a smallish company. :001_smile:

MarieNoelle

This is where the concept of materiality is all relative. For our clients (mainly sole traders and small ltd cies) the limit is set at £250....

Spamkebab

Maybe Assets should be classed ie, working class assets capitalised over £250, middle class assets capitalised over £1000 and upper class assets capitalised over £5000 lol.

MarieNoelle

Spamkebab wrote: »

Maybe Assets should be classed ie, working class assets capitalised over £250, middle class assets capitalised over £1000 and upper class assets capitalised over £5000 lol.

....or split it in 7 categories according to the latest studies on British classes!

Spamkebab

Lol Marie