Providing fair value of assets for closure - where do you draw the line

[BlasterBates]

Question of fair asset values of company used for contracting... I have read the threads and the advice is conflicting.

How do you generally determine what counts as an asset? Things such as a laptop or mobile appear to be obvious but what if they have been expensed rather than treated as capital expenditure / depreciated?
Where would you draw the line too - surely a phone charging cable bought for £5 has practically no resale value (although there are people trying to sell used cables on eBay... obviously). Thanks!

The resale value is irrelevant when depreciating an asset. You simply estimate how long you intend to use it and calculate a straightline depreciation YOY.

With small items you can choose between expensing and depreciating. It's actually more efficient to expense an item, as a pound of tax saved today is worth more than a pound of tax saved next year.

[northernladuk]

Well, I simply do not quite fancy going through years worth of spreadsheets and catalogue every little item I have bought and finding a sensible current price for it. Hence asking for some sensible de minimis threshold (would not be too dissimilar to trivial benefit allowance or so).

Again, common sense should prevail. If it's so insignificant you can't remember it then it's probably worthless. You are going to remember the things that are likely to have value in a few years time.

[Patrick@Intouch]

You only need to obtain a fair value for any items treated as assets on the balance sheet. These items are fixed assets and will appear in the company accounts each year, reducing in value each year as a result of depreciation.

It's likely that you will either have been claiming an amount of tax relief each year for these items (capital allowances) or an amount by reference to the purchase price in the year of purchase (annual investment allowance).

In declaring these purchases as assets you (your accountant) are really saying that you expect them to have a residual value on disposal and it is this residual value that you are trying to find.

In disposing of an asset your company would either scrap it (if it had little/no value) or sell it at market value. If your company is "selling" the assets to you then you could use sites like ebay to work out roughly how much you would need to spend for a similar age/quality item.

Anything that appeared on the company profit and loss account in the year of purchase would be classified as a revenue cost and can be ignored for valuing assets on disposal, because they aren't an asset.

[ConcernedCitizen]

Just see what ebay charge for the same items with the same age.
The fact you have expenses a laptop rather than treating as an asset doesn't materially affect the fair value. It's just an accounting method to handle the depreciation losses against tax.

Makes sense - thank you for clarification on this.

Just from the title I assumed this would be another thread where people know the answer but because it involves money and ability to make a quick buck out of the company they come on here hoping to get some responses in their favour. I don't think I'm wrong either. We seem to have had a raft of these recently.

Forget the accounting side. If the item can be sold on for any reasonable value then that's the valuation and you pay the company that much for it. If you are too close to it or too greedy to see the wood for the trees then just ask one of your mates who is distanced. They will be able to employ enough common sense to say whether cables aren't worth reselling if you can't.

Well, I simply do not quite fancy going through years worth of spreadsheets and catalogue every little item I have bought and finding a sensible current price for it. Hence asking for some sensible de minimis threshold (would not be too dissimilar to trivial benefit allowance or so).

[northernladuk]

Just from the title I assumed this would be another thread where people know the answer but because it involves money and ability to make a quick buck out of the company they come on here hoping to get some responses in their favour. I don't think I'm wrong either. We seem to have had a raft of these recently.

Forget the accounting side. If the item can be sold on for any reasonable value then that's the valuation and you pay the company that much for it. If you are too close to it or too greedy to see the wood for the trees then just ask one of your mates who is distanced. They will be able to employ enough common sense to say whether cables aren't worth reselling if you can't.

[Lance]

Question of fair asset values of company used for contracting... I have read the threads and the advice is conflicting.

How do you generally determine what counts as an asset? Things such as a laptop or mobile appear to be obvious but what if they have been expensed rather than treated as capital expenditure / depreciated?
Where would you draw the line too - surely a phone charging cable bought for £5 has practically no resale value (although there are people trying to sell used cables on eBay... obviously). Thanks!

Just see what ebay charge for the same items with the same age.
The fact you have expenses a laptop rather than treating as an asset doesn't materially affect the fair value. It's just an accounting method to handle the depreciation losses against tax.

[ConcernedCitizen]

Question of fair asset values of company used for contracting... I have read the threads and the advice is conflicting.

How do you generally determine what counts as an asset? Things such as a laptop or mobile appear to be obvious but what if they have been expensed rather than treated as capital expenditure / depreciated?
Where would you draw the line too - surely a phone charging cable bought for £5 has practically no resale value (although there are people trying to sell used cables on eBay... obviously). Thanks!