Where should I draw the line on declaring an item a fixed asset? I have our vehicles, scissor lifts and excavators down as fixed assets, but should I also include power tools (e.g. band saws, drills, sawzalls, etc.)?As far as office equipment goes, I have declared computers, desks and filing cabinets, but what about other smaller items (e.g. desk organizers, calculators, label makers, etc.)?
Desk organizers and things of that nature are just considered office supplies. Don't depreciate them. Power tools - it is up to your and your policy. If they have a useful life of more than a year, you can depreciate them. However, you probably need to set yourself up a policy on a dollar limit for fixed assets - such as anything less than $1,000 is not a fixed asset.
You can include all your above mentioned items, but small tools and inexpensive items may be depreciated very fast, or charged off as a daily expense when purchased. These may be listed in the case of sale of a business, but a buyer may not place much value on some. Large equipment and power tools generally have a longer life, and in some cases, such as vehicles, the IRS does not permit accelerated depreciation. Some equipment depreciation has been allowed to be accelerated in recent years but that can change periodically. New tax policies must be reviewed every year. Desk organizers and/or office supplies/stationery should not be included. These are generally considered daily expenses. Again, in a sale situation, large quantities may be considered. I'm not an accountant, but am retired after 50 years in retail. An accountant may agree or disagree with me.
