Fixed assets are given special treatment in the accounts and are items that retain a value for several years.
Fixed assets are given special treatment in the accounts, because they retain a value for several years. Strictly speaking, all fixed assets should be capitalised and written off over their useful lives, but to avoid keeping records of numerous insignificant items, Competex’s policy is to capitalise only those items costing over £150. The exception to this rule is computer software, which can quickly become out of date and is written off in the year of purchase. Although this is normally accepted, HMRC is entitled to overrule this policy if it chooses so to do.
Competex has adopted a standard approach for all our clients, and will charge depreciation at 25% for office equipment and 50% for computer equipment. This means that the depreciation will be charged to the Profit and Loss account each year, and that assets will remain on the books until they are disposed of or replaced, at which time any loss on disposal will be charged to the Profit and Loss account.