Annual Depreciation

M veis

please could anyone tell me how to work out the annual depreciation of goods ie fixtures and fittings of a bar. thanks m

Alix

Hey M.

You need to calculate what the total cost ( ex vat ) for the fixtures and fittings were. Then you need to depreciate this figure over a number of years ( usually 5yrs)

Eg

Cost of Fixtures and Fittings = € 20,000

Depn life = 5 years

€ 20,000 / 5 years = € 4000 is debited to the P&L every year for 5 years.

Note that the nett value of the fixtures and fittings will reduce every year on your balance sheet by the € 4000 , so

Year 1 € 20000-€ 4000 = € 16,000 value of F&F in Balance Sheet
Year 2 € 16000 -€ 4000 = € 12,000 value of F&F in balance sheet etc etc


Hope this helps

kluivert

Do out a list of the cost of fixtures and fittings - backed up by copy of the invoices as proof.

Total all fixtures and fittings purchased in the financial year.

Decided on a depreication rate to use - this is based on the useful economic life of the assets. These rates vary on the type of asset but below is a guidleline.

Fixture and Fittings - (5 years) 20%
Plant & Machinery - (5 years) 20%
Computer Equipment - (3 years) 33.33%
Premises - (0 years) 0%

Multiple the cost of FF with the depreciation rate (10000x20% = 2000)

Now do out your schedule

Fittings and Fixtures:
Cost 10000

Less: Depr 2000

Net Book Value 8000

Hanley

Also, this dep can't be used to reduce your tax bill as it needs to be added back on when computing your case 1 profit.

bk1

Hi, on a similar topic, what is the general consensus for writing off website costs - is it three years?

Thx

www.bookkeepingpartners.ie

mkdon05

Hanley wrote: »

Also, this dep can't be used to reduce your tax bill as it needs to be added back on when computing your case 1 profit.

If we are getting "nitty gritty" about it, dont forget you capital allowances against tax on the F&F @ 12.5%:)

Hanley

mkdon05 wrote: »

If we are getting "nitty gritty" about it, dont forget you capital allowances against tax on the F&F @ 12.5%:)

Haha touche. I was just mentioning it so they didn't try to over charge dep. to reduce their profits and in turn, tax bill!!

Superdub2

Okey then if we are reallllyyyyyyy getting nitty gritty,

(1) its not necessarily the VaT exlclusive amount that is depreciated. It is the capitalised amount which in the case of non commercial vehicles will also include the VAT

(2) Generally buildings are depreciated, usually at 2%. As an auditor i would only accept land not being depreciated as this will obviously not reduce in value, well not in the current climate!

(3) Third and final point, if somebody needs to come up on onto boards and get accountancy advice which they then intend on using to prepare financial statements they have a problem!

mkdon05

Superdub2 wrote: »

Okey then if we are reallllyyyyyyy getting nitty gritty,

(1) its not necessarily the VaT exlclusive amount that is depreciated. It is the capitalised amount which in the case of non commercial vehicles will also include the VAT

(2) Generally buildings are depreciated, usually at 2%. As an auditor i would only accept land not being depreciated as this will obviously not reduce in value, well not in the current climate!

(3) Third and final point, if somebody needs to come up on onto boards and get accountancy advice which they then intend on using to prepare financial statements they have a problem!

I think this moves on a step from "Nitty Gritty", In fact, I think it actually graces the realms of "NIT PICKING"
:D:D