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• # 78860
• Fri 27 Jan 2012 05:32 PM

Hi All

I wonder if I can take advantage of your thoughts. I have just taken on a new Self Employed client who runs a small  Marketing business, start up September 2011. She has sent me a list of Assets to bring into the Company, approx £1000 of which are Marketing Books. Some costing as little as £5 others £200/£300. If taken as an aggregate I feel that maybe they should be capitalised  as they are are constantly referred to for research and used in the business and will continue to be so however, I am having doubts and wonder should they really should be expensed, especially the cheaper ones.......help?

Even though it is probably a silly question I would really appreciate your thoughts on this one. I have looked on HMRC and scoured another couple of forums but there does seem to be a mixed feeling about this and nothing definitive!!

Thanks

Carrie





Edited at 27 Jan 2012 05:33 PM GMT

Edited at 27 Jan 2012 07:19 PM GMT

• Carrie Crinage
  CC Bookkeeping
  www.cc-bookkeeping.co.uk
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• # 78872
• Fri 27 Jan 2012 08:59 PM

Hi Carrie,

You might want to google 'IAS 38 Intangible assets' and have a read of that. There are certain criteria that need to be satisfied to capitalise on Research & Developement costs.

The International Accounting Standards (IAS) states 'Expenditure on research must always be written off in the period in which it is incurred'.

Hope this helps.

Kindest regards

Kerry

Edited for spelling mistake.

Edited at 27 Jan 2012 09:00 PM GMT

Edited at 27 Jan 2012 09:00 PM GMT

• www.berrybookkeeping.co.uk
  
  My responses are based on my opinions, not necessarily facts.
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• # 78873
• Fri 27 Jan 2012 09:02 PM

Hi Carrie,

This is just my opinion, others may have different  :-)  Personally I would capitalise them as a whole.  As she is a Marketing business and these are marketing books, presumably used in the business for more than a year, then I would consider them assets of the business and capitalise them. 

Pauline

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• # 78881
• Fri 27 Jan 2012 11:53 PM

> Hi Kerry

I don't think this really applies as R&D it is more of a professional research library that has been built up.

I would expense them rather capitalise on the basis of value of each book is not that great an amount even at £300. I tend to start considering capitalising items once their value exceeds £500.

Kind Regards
Stuart
>
>
>

• Forum Moderator, South East & Greater London Regional Chairman
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• # 78888
• Sat 28 Jan 2012 10:18 AM

Stuart Wildmansaid:

“> Hi Kerry

I don't think this really applies as R&D it is more of a professional research library that has been built up.

I would expense them rather capitalise on the basis of value of each book is not that great an amount even at £300. I tend to start considering capitalising items once their value exceeds £500.

Kind Regards
Stuart
>
>
>”

• www.berrybookkeeping.co.uk
  
  My responses are based on my opinions, not necessarily facts.
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• # 78900
• Sat 28 Jan 2012 01:16 PM

Hi

Thanks for coming back to me. Yes Kerry I had already discounted IAS 38 as, like  Stuart, I did not feel it relevant in this case. But thank you for your input, I should have made that clearer in my original post that I had considered it, apologies.

I can understand the reason behind expensing individually, the only reason I thought about Capitalising was because they are all being brought into the business en masse, at the start of formal books and as Pauline said they will be used for the life of the business and continually referred to.

Still not 100% sure, but as Stuart is far more experienced than myself I am inclined to follow his lead.


Once again thank you all.

Carrie

• Carrie Crinage
  CC Bookkeeping
  www.cc-bookkeeping.co.uk
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• # 78903
• Sat 28 Jan 2012 01:59 PM

Hi Carrie

You need to do what you think is justifiable and correct. although I may have more experience that does not mean I am always correct (I hate to admit that just having to mop away the tears). I am just offering another point of view.

If you feel capitalising the books is the right wau to go and you can argue your point then do it however bear in mind that by expensing them she will get 100% allowance against tax in the year of purchase where as if you capitalise them the owner will on get the WDA each year until they are fully written down.

There is no right and wrong answer per se as there are legitimate arguements on both sides.

Warmest regards
Stuart

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