Depreciation - Getting rid of items not fully depreciated

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Niallymac

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What happens if i have only depreciated an item by 3 years, and it is knackered and needs to be chucked out. Can I claim the balancing 5/8ths depreciation in one lump ?
 
Re: Depreciation - Getting rid of items not fully dereciated

if the asset is redundant and is to be sold/written off the books.. then the difference between the cost less depreciation charged to date less any sale proceeds is charged to the profit & loss in the year of disposal.
 
Re: Depreciation - Getting rid of items not fully dereciated

I don't think this is an accounting issue, it is a tax issue, and the OP is talking about capital allowances and not accounting depreciation.
 
Re: Depreciation - Getting rid of items not fully dereciated

Niallymac said:
What happens if i have only depreciated an item by 3 years, and it is knackered and needs to be chucked out. Can I claim the balancing 5/8ths depreciation in one lump ?
Click to expand...

Are you talking about capital allowances tax issue or an accounting issue?
As some people confuse interchange capital allowances and depreciation!

If it is a capital allowances issue you may be able to claim what is called a balancing allowance
Bascially you take your proceeds received (if any) and compare it to the tax written down value (the cost less c/a claimed) the difference is a balancing adjustment or additional capital allowances, the reverse is a balancing charge and a clawback of capital allowances received

If its an accounting issue it will be a fixed asset diposal and the net book value - undepreciated will be written off as a "loss on diposal"
 
Referring to Capital Allowances. Very little lasts 8 years in one of my properties, I'm talking beds, sofas, tables and chairs etc.

Thanks for the replies.
 
Niallymac said:
Referring to Capital Allowances. Very little lasts 8 years in one of my properties, I'm talking beds, sofas, tables and chairs etc.

Thanks for the replies.
Click to expand...

Ok, if they are being scrapped, wth no value, you may claim, in this year, the amount not claimed through capital allowances system this is called a balancing allowance or effectively the amount left unclaimed

The comp will look like this

Proceeds received on sale/scrappage
Less tax written down valaue

Equals balancing allowance for offset against renatal income
 
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