Question

Q1: What is the different between long-term asset and office supplies?

Q2: If I have a stapler that purchased to me from 1990, it should be on long-term asset but it was expensed as office supplies! why?

Answer 1

A1: Long term asset are held in the business for generating revenue and these long term assets are not sold and purchased regularly. For generating revenues long term assets are required. Example: land, building, machinery, furniture. The balances of long term assets are reported in balance sheet.

Office supplies on the other hand  are used in the business for daily use. Example: Paper, pens, calculators etc.. These expenses are never capitalised. They are treated as expense and charged to income.

A2: A stapler may have a useful life of 10+ year, but the cost of a stapler is nominal because of which it can never be capitalised and treated as an expense for the period in which the stapler is purchased. The deciding factor is monetary value. The different between value of stapler and the value of long term assets is very huge. Stapler may cost not more than $100 but the value of a long term assets may be $100,000.