Opening and Closing Stock for a equipment rental company

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ccris

(Newbie)Newbie

28 Feb 2023

I purchased a business in the middle of the financial year from my friend.

The purchase was for the business name and equipment.

The total purchase price was around $5,000. The total income has been ~$9,000.

I am a sole trader, running and operating out of an office in my home.

The business is for the HIRE of travel and safety equipment: equipment goes out, is used, and is then returned.

The equipment is obviously second hand and continues to decline in value as it gets older.

I'm unsure how the Opening and Closing stock works with hire equipment, and particular in relation to first purchasing a business. Is stock even the same as equipment?

How do I fill in the 'opening stock' and 'closing 'stock' fields?
1. is it just the original cost of the equipment in both fields if there is no change to stock?
How do I apply depreciation to the equipment? Should i manually calculate the current value of the equipment and enter it into 'closing stock', or done in a separate section?
Does the purchase of equipment count as a deduction? or is it just

Thanks for your help.

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KevColl

(Superuser)Superuser

28 Feb 2023

How do I fill in the 'opening stock' and 'closing 'stock' fields?

You don't, equipment held for hire is not trading stock.

How do I apply depreciation to the equipment? Should i manually calculate the current value of the equipment

The value of the individual assets held for hire form part of a balance sheet item, this may be Equipment Held for Hire. The assets are depreciated at the appropriate rate as per ATO schedule. The amount of depreciation charged for year is an expense on the profit and loss.

The opening value of the equipment for hire may have been included in the contract of sale, or gathered from the previous owners depreciation schedule. Note - opening value of assets cannot exceed the purchase price of the business.

https://www.ato.gov.au/law/view/document?DocID=TXR/TR20221/NAT/ATO/00001