depriciation

by **jaskhan** on Fri Nov 25, 2011 2:24 pm

Good afternoon

Just a quick one guys, if a new company is making a loss at the year end , before adding depriciation of assests to the p/l. Can you hold the deprieciation ie not charge it until the company is making profits or must assests be deprieciated in the year they are added ?

Kindest Regards

by **Incredulum** on Fri Nov 25, 2011 6:36 pm

Depreciation is not tax deductible. Do you mean capital allowances, or what?

by **pjclar02** on Fri Nov 25, 2011 11:07 pm

Hello there

I think this is more of an accountancy question than a tax one, it appears you are aiming not to present too high an accounting loss by including a depreciation charge.

Under FRS15, you are required to charge depreciation to reflect the economic benefits consumed during the period. Typically, most fixed assets have a limited useful life and therefore depreciation must be charged.

If, however, the depreciation charge is considered "immaterial" to the appearance of the accounts, such that it would not mislead stakeholders taking an interest in the figures were it not to be included, then you are permitted not to charge depreciation.

Normally, charging depreciation would only be considered "immaterial" where the assets in question have either very long useful lives or particularly high residual values.

Hope this helps.