Question regarding treatment of asset purchases

MooreAccounts

Hi all,

I'm new to the forum - hope you can help!

I have a client who runs a chain of personal fitness gyms across London. He's been trading for just over a year but has not been keeping accounts - this is where I come in.

He's bought perhaps £2-3k worth of small value weights equipment - dumbbells, barbells, weight mats, kettle bells - but through small vendors at £30-40 a pop. I believe them to be fixed assets as their useful life will be more than one year, but given the low the value of the individual items, can they be classed as such? Or is it worth grouping all asset purchases over the period into VAT-reclaimable and VAT nonreclaimable and entering as two single transactions in the period?

Be great to know your thoughts!

Cheers,
Steve

MarieNoelle

I would introduce as one asset (e.g. "gym equipment"). However you classify this (revenue or capital) your taxable profit will be the same.
Not sure I understand the VAT reclaimable/ non reclaimable part?

MooreAccounts

Thanks MarieNoelle, the client has just become VAT registered and will be reclaiming VAT on previous asset purchases. I think I probably just worded it wrong!

Gem7321

I would treat them as a cost of sale/direct cost in the P&L

Dinky

I would treat them as equipment expensed (effectively repairs and renewals) - below the line otherwise it will skew the margin. Just my opinion though!