Help convince CTO desktop peripheral are consumables and not assets to be tagged

[u/No-Barber964]

Our company has been asset tagging everything at a desk to ensure that we can control the full lifecycle of hardware from procurement to disposal.

I’m trying to shift our process for the desk level hardware to only tag monitors as an asset and make keyboards/mouse, webcam, docking stations as consumables that we wouldn’t asset tag and only classify as consumables to track inventory levels

Our cto is consented we will loose visibility into where things are going and why we have to continually purchase more hardware when the firm isn’t growing

Any advice ?

Edit.. to add more context on the dollar amount of each model as many are saying to set a $ threshold

Monitor - $350 Headset - $250 Webcam- $160 Docking station - $100 Keyboard/mouse - $60

[u/Jeffbx]

100% they should be. Laptops are consumables, too.

It's basic CAPEX vs OPEX. We only track things because way back in the day of the $3000 laptops & $2000 PCs, they were capital expenditures. We were required to track them as depreciable assets for accounting.

Today, $1000 laptops are not "assets" from an accounting standpoint. They should be tracked from a technical standpoint because they contain company data, they're a high-theft item, and a handful of other reasons. But from an accounting standpoint, they're consumables.

IMHO it's important to track computers (and printers) to make it easier for IT to know who has what, and where it is. Everything else is disposable - monitors, docks, mice, keyboards, cables, etc, and you may spend more money tracking them than they're actually worth.

[u/GEC-JG → u/Jeffbx]

I disagree that laptops—regardless of price—are not considered assets from an accounting standpoint. I also don't understand why you consider hardware purchases as OPEX instead of CAPEX; OPEX isn't just a measure of low versus high cost.

[u/Jeffbx → u/GEC-JG]

No, it's whether it's capitalized as an asset. And that probably varies from company to company, but the last couple places I worked at do not - the threshold is too low, and they're expensed.

[u/GEC-JG → u/Jeffbx]

Per generally accepted accounting principles (GAAP), CapEx is recorded on the balance sheet as a capitalized asset which is depreciated (if tangible) or amortized (if intangible) over a longer period of time. OpEx is recorded on the income statement and is expensed when incurred because the benefits of having the asset are realized in a shorter period, typically within a year. So, even if the laptops are inexpensive, I highly doubt the benefits are realized within a year, unless these companies are (wastefully) replacing laptops every year.

When looking at CapEx versus OpEx, there are generally 3 key considerations:

• Ownership - If the business takes ownership and retains the asset, it is generally considered CapEx. With OpEx, the business does not retain ownership.

• Time period - CapEx investments are made upfront and provide value over an extended period, usually several years. OpEx is an ongoing operating expense tied to short-term operations.

• Purpose - CapEx aims to upgrade capabilities or infrastructure for long-term productivity gains. OpEx maintains short-term operations.

In the case of laptops and PCs, most businesses will capitalize these purchases as CapEx since they retain ownership of the equipment, expect to use them for more than one accounting period (usually over 3 years), and aim to enhance productivity.

Again, this is just in general, and everything I'm reading does say most, so clearly some businesses do legitimately consider them as OpEx. That said, I know you don't control their accounting practices—and I'm no accountant by any means myself, though I have previous experience in basic small business accounting—but I feel like they are treating laptops incorrectly as OpEx, even if they are inexpensive.