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• # 97871
• Thu 27 Feb 2014 11:43 AM

Hi, I have a new customer who is starting a business with some cash and a lot of equipments (large machines and such), I'm sure I just treat them the same as an introduction of capital and debit the capital account and credit the asset account and then just depreciate them every year as normal but I'm doubting myself is this correct? Also what are the benefits of treating items as an asset as apposed to an expense, I know you have to depreciate them every year, but depreciation isn't an legatiment expense on the self assessment forms and they have to be treated as capital allowance, so is that better for reducing the amount of tax payable? 

Thanks!

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• # 99094
• Mon 14 Apr 2014 11:52 AM

Hi Abond999,

Treating machines as an expense that are going to stay within the firm is wrong because every year the balance sheet items are brought forward and the profit and loss items are forwarded to the profit and loss along with the sales and the sales and purchase returns.

Items that are staying with the firm e.g. company cars and machines that produce goods for the company that are staying with the company are assets. I hope this enlightens you,

Kind regards

Paula Welsh

• Hello all,
  
  i just noticed we have a forum, just poking around the members area.  My name is Paula welsh and I have been a member since 2005, starting with Associate member and now a full member

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• # 99099
• Mon 14 Apr 2014 02:40 PM

Hi Abigail,

Just a quick note to say that your posting for capital introduced is a debit to assets and a credit to capital.

I'm sure that's what you meant 

• Kind regards,
  PeteL  

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