[Question] A question on bookkeeping - tools, accessories and depreciation

[SilverNodashi]

Hi,

In terms of book keeping (accounting?),

How would one log tools and accessories brought from places like Marko, Tool Center, etc?

So, let's say I brought an electric drill for R5k, and neet to claim VAT, and depreciate it, what would the correct procedures be?
In XERO, I see a set of books called "Repairs and Maintenance", but this doesn't quite fit. So I create a new set of "expense" books called "Tools and accessories". So now when I book the drill's invoice, I assign it to this set of books, right?

Now, in futre, any other tools, like a welding machine, cut-off machine, etc goes into this set of books, right?

Drill bits, welding rods, etc, which are essentially "consumables", does it go into the same set of books, or should it ideally be separate?

And then, how do I depreciate this ? I did see the depreciation allowance table, but not quite sure how to use it?

[sterne.law@gmail.com]

Use expensed equipment.
Certain value asset can be written off straight away.
Claim teh VAT and expense it.

[padjakkels]

If the amount it under R7,000 per transaction, then you claim it as an expense. If it is over R7,000, then you capitalise it and write depreciation off it.

[SilverNodashi]

If the amount it under R7,000 per transaction, then you claim it as an expense. If it is over R7,000, then you capitalise it and write depreciation off it.

Hi,

Thanx. Is that R7000 amount, per item, or per total order?

[Dave A]

Thanx. Is that R7000 amount, per item, or per total order?

It'll be per item, unless it is part of a set - in which case you have to use the value of the set.

The example used is a dining room table and chairs. You can't apply the threshold to each individual item, but to the total value of the set.

[SilverNodashi]

It'll be per item, unless it is part of a set - in which case you have to use the value of the set.

The example used is a dining room table and chairs. You can't apply the threshold to each individual item, but to the total value of the set.

ok, thanx. So a cordless drill, drill bits, screw drivers and hammer will then all be considered as individual items and only the cordless drill will be depreciated? Although it needed to cost more than R7K.

So, different question, what benefits are there in depreciating something like this?

[Andromeda]

It seems many folk are confused by the R7k thing. To clarify somewhat; it is an income tax concession and refers to wear and tear, not depreciation. For example:

Assume the accounting policy makes no mention of a threshold amount. The company buys a widget for R5000.00 The widget is depreciated over 5 years.

Financial:
In year 1 the company charges R1000 to depreciation in the income statement.

Taxation:
In year 1 the company charges R5000 to wear and tear in the taxation income statement