New Computers - capitilise or not?

Midas521 · January 14

Hi. The company I work for has just purchased 2 new computers. Value of £916 in total. They are to replace 2 older ones that are not capable of doing what we need. In my mind the 2 new PCs should be capitlised because of the cost involved. the ones they are replacing are still on the FA Register but are at least 7 yrs old, and still have a NBV

However, the external accountant, has said that because they are a direct replacement for 2 older ones that he does not want them put on as new additions.

It doesn't sit right with me and I feel the treatment is wrong.

Can anyone help or advise please?

Thank you

Pian32 · January 14

I mean either it's a new FA, or you're reevaluating the value of the replaced asset to the new value with a small amount that would end up in repair. I think it'd actually be easier to have it as new especially if you haven't got rid of the old computers at this stage.

davealucas · January 14

From a technical point of view, you are correct it is an asset that should be capitalised. That said, does your organisation have a deminimis value for capitalising items?

Just as an example, in my organisation, we would not capitalise anything less than £50,000. in our case we would not capitalise one or two computers, but we would if we replaced several of them.

Midas521 · January 15

davealucas said:
From a technical point of view, you are correct it is an asset that should be capitalised. That said, does your organisation have a deminimis value for capitalising items?
.

We have items on the FA Register that are £300 + Nothing less than that.
Which is one reason I believed that these new computers should be added as an addition. The old PCs in my opinion should have fully depreciated by now too being 7 yrs old, but again I have inherited the schedules and I think they should have been straight line depreciated but historically they are depreciated on reducing balance. Unfortunately not my call

. Just frustrating when you believe your knowledge is correct but someone higher disagrees.

davealucas · January 15

@Midas521 In that case my simple view is that they should be capitalised and the replaced computers (assuming they are gone) removed from the register.

Your argument complies with FRS102 as far as I can see and you have done nothing wrong in raising that concern. it is frustrating when you are overruled when you know you are correct (had it done to me several times in my 30+ year career), but keep going.

New Computers - capitilise or not?

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