SMALLWARES

This report is federal income tax oriented and may differ from the uniform system of accounts.

Generally "smallwares" consists of the following categories: glassware, flatware, dinnerware, pots and pans, table top items, bar supplies, food preparation utensils and tools, storage supplies, service items and small appliances costing $500 or less.

Industry surveys reveal that package of smallwares to open a restaurant can range from $10,000 to $50,000with a useful life of over one year.

A start-up package of smallwares for a new food and beverage operation is capitalized to an asset account and is depreciated over a period of not less than 60 months. Thereafter, an IRS procedure allows restaurant and tavern owners to expense the cost of replacement smallwares in the year purchased.Example—Dotco Restaurant purchases $15,000 of smallwares from several vendors in 2003 and opens in July of that year. Dotco must capitalize the $15,000 expenditure and depreciate the asset. In 2004 Dotco buys $4,000 of smallwares to replace missing or shopworn items and to increase the smallwares for business expansion and efficiency; the $4,000 can be expensed in 2004.

Examples of Smallwares (for an eat-in establishment):

• China, dinner plates, paper or plastic plates
• Glassware, paper or plastic cups
• Silverware and flatware
• Pots and pans;
• Kitchen towels
• Kitchen staff uniforms, Wait staff uniforms
• Food preparation utensils and tools such as pastry and grill brushes, skimmers, knives, kitchen shears, strainers, spatulas, colanders, shakers, measuring cups and spoons, thermometers, gloves, goggles, timers, scales, shaker baskets, salad spinners, lettuce crispers, sifters, mixing bowls
• Small appliances costing $500 or less such as iced tea dispensers, can openers, condiment pumps, individual food warmers, heat lamps, slicers, glass washers, electric knife sharpeners, blenders, juicers
• Table items such as salt and pepper shakers, ash trays, sugar caddies, condiment caddies, tablecloths, menu holders, vases and candleholders
• Service items such as pepper mills, cheese graters, bread boards, pitchers, coffee pots, storage racks, trays, bus tubs, tray carts, booster seats
• Storage supplies such as food containers, flatware sorters, dish containers and spice racks;
• Bar supplies such as mixing glasses, cutting boards, jiggers, bar caddies, wine coolers, decanters, shakers

For more information, refer to Revenue Procedure 2002-12: http://www.irs.gov/pub/irs-drop/rp-02-12.pdf

• Accounting for Hospitality Managers, 4^th, R Cote, pages 53,54,76,87
• Basic Hotel & Restaurant Accounting, 6^th, R Cote, page 62, 264

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