So what’s the difference and how do I know which is which?
Generally, the rule of thumb is that if the item being purchased has a useful life of more than 1 year, then it’s capital and you would depreciate the cost over the useful life of that asset. For example, a laptop might be between 3 and 5 years or a piece of machinery might be 5 to 20 years.
Repairs would usually be expensed in the year, unless it’s to improve a property that is already capitalised.
If you are in doubt and want to talk to someone, please give either of us a call
Call –Tim: 07875 410466
Call – Nic: 07985 645087
