You need to post delivery charges seperately. It is only for assets where you can include delivery costs to comply IAS16.
Since the company can only sell the stock that has been purchased, thus delivery charges should not be a part of stock purchases. Although it can be a direct expense but not a part of stock expenses.
Hope this helps.
Edited the mistake of my oversight. It is IAS 16 and not IFRS 16. Thanks for spotting Shamus
-- Edited by napster on Sunday 3rd of March 2013 08:23:18 PM
In a shop scenario, is there any over-riding reason to account for stock and their delivery charges separately? It would be so much easier if I could lump them all together under the same NC but I don't want to shoot myself in the foot when the accountant comes to make use of the figures at year end.
Unfortunately, unlike bookkeepers, accountants don't seem to work weekends, so I thought I'd ask here.
In general (but not always) postal charges are exempt. Such cannot be said about the goods themselves.
Conversely there are cases where delivery charges must be included. For example, in purchasing a fixed asset all costs incurred in bringing the asset to the location and condition for it's intended use are capitalised as part of the original cost.
Note also that to include postal charges in sales would skew the management reports.
hope that helps,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
In this case, deliveries of stock for sale are by haulier, which is arranged and charged by the manufacturer. Management accounts-wise, it seems to me that delivery costs are intrinsic to the cost of buying the goods themselves; breaking delivery out as a separate cost wouldn't add anything significant to the P&L picture.
I'm hoping that's how the accountants will view them.
You need to post delivery charges seperately. It is only for assets where you can include delivery costs to comply IFRS16.
Since the company can only sell the stock that has been purchased, thus delivery charges should not be a part of stock purchases. Although it can be a direct expense but not a part of stock expenses.
Hope this helps.
Hi Naveen,
sorry, think that you've made a slight typo, I think that you meant IAS16.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thank you for the pointer to IAS16, Naveen. That's interesting and very useful to be aware of.
Reading into IAS16 for the first time, though, does it actually apply to inventory items? I read the definition of Property, Plant and Equipment (as referred to in the IAS) and it appears to me as applying to capital assets only.
From this reading, I cannot see why the haulage/delivery charge for a consignment if inventory items should not be regarded as an inextricable element of the cost of that consignment. As such, would it not form part of the cost of goods sold?
Shaun and Naveen have now nudged me to do some further reading of the IAS (thanks fellas - this is all good for me) and I see that it's IAS2 which covers inventory, and the cost of inventory is held to include the costs of getting it into stock. I think that answers my query.
whilst reading those two also read in conjunction with IAS18 Revenue.
The equivalents if you are interested under UK GAAP are SSAP9 (stock & long term contracts), FRS15 (Tangible Fixed Assets) and FRS5 (Reporting the Substance of Transactions).
Also note that as we are for the most part playing with smaller entities you may wish to use FRSSE that at times dictates the direct opposit of the full versions of the standards.
For example. Under IAS23 borrowing costs the financing of fixed assets must be capitalised as part of the asset but under the FRSSE borrowing costs are never capitalised.
Have fun,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
to slot all of the various bits into some sort of rational framework it might be worth investing in the ACCA study text for paper F7.
You don't need to go to the expense of this years version but get one from 2011 or after as that was the last time that there were any significant changes (4 new standards with knock on effects to several of the other standards).
I prefer Kaplan texts to BPP as kaplan have more of a see then try yourself approach.
Combine this with using the free Opentuition lectures for F7 plus the IASplus standard overview from Deloitte (again, a free resource on the net).
Note the F7 is a mid level skills paper. There is a higher version called P2 but that one is best to be avoided as it's a bit of a monster and the last thing that I want to see is people with a genuine interest being frightened off the subject matter.
Another great way to learn a lot about financial reporting standards is to read old exam papers for the skills and advanced level audit papers (F8 and P7) whicjh set scenarios such as firms handling revenue recognition in one way and expect the student to be able to disagree with the treatment using accounting standards.
I really enjoy those one's but I just cannot write fast enough to answer all of P7 in the three hours meaning that I've actually failed it a couple of time whilst knowing the answers (how frustrating is that).
When reading these you can pretty much avoid questions and study to do with financial instruments. Its a nice to know but something that you are likely to use very little of in the real world (unless you get a job in the financial services industry).
All the best,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks My first thought was - as if I need more homework. But then, that's what CPD is all about, isn't it? So my second thought was - I wonder what sort of wine ole egg-head's got there ...?
Ole egg-head... You've been reading how to win freinds and influence people haven't you! lol
The wines more likely to be cranberry juice (Or red bull laced with cranberry juice) as the fun of single parenting makes one pretty much T total.
How does your bodies CPD work? How do you prove that you have read a book?
For info, Reading the kaplan F7 study text cover to cover assuming about 5-6 hours study per day would take 3-4 weeks.
For 5-6 hours per day solid for 3-4 weeks I definitely advise a lot of red bull... Tesco and Asda do it in handy ltr size bottles! (called kick and blue charge respectively).
talk soon,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
thank you.
