When starting out 8 months ago i purchased equipment, tools, office furniture etc and put them down as “fixed assets”, i have now learned that some of the cheaper items are better off being put down as expense rather than dealing with depreciation on items that are not worth the paperwork.
Some tools/equipment i have are worth over £1000 and im in the process of working out the depreciation for these items but others worth as little as £50 i believe i should of put them down as expenses. What would be the procedure in manager to change a low value fixed asset to an expense.
Cr fixed asset
Dr expenses “sub category”
As an example i have a racking system that i never plan to sell purchase for £80 and storage boxes specifically sized for said racking purchased for £60. I see no point in the depreciation process and want to class these items as expenses.
Things im am concern about is if i expense all of the low value “fixed assets” right now in one go it will make this months profit non existent. To correct this issue i am thinking of expensing a few of these items at a time in the coming months.
My question is am i doing anything wrong from an accountants perspective doing this? if not then i still need to know if i am correct regarding the above suggested journal entry.