Capital versus revenue cost.
I would like to have a little bet with anyone interested that given the reduction in the capital expenditure allocated from the Exchequer for public services, some accounting engineering is going on. After all, what is deemed a “capital” cost and what a “revenue” cost is down to definition. All capital is revenue eventually, it is merely a question of deferment via the mechanism of depreciation/amortisation.
If I ran an educational establishment (where capital spending is reportedly being cut back) I would ask my money man to think of ways to re-classify some categories of hitherto capital cost and/or start changing our behaviour. We might, for example, think of things like fixtures and fittings and furniture and office equipment and raise the floor amount at which “capital” arises. We might also rent/lease (short term) equipment previously bought in. We might outsource more stuff. Someone just said that local government needs to be more enterprising, probably not with this in mind.
More at www.jgwalkersmith.co.uk
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