I did CIMA and AAT but have been out of the game for a while as I was working on producing accounts for a public body,this type of thing is probably more practice orientated.
Looked at IFRS 13, fair value mentions exit costs etc,but taht excludes inventories. Its this situation that concerns me,so I need clarification if possible.
Just wondered if anyone has encountered this situation as its not a donated asset,but just given away,as part of a contract to clear shops.These are non current assets as per IAS 16 that the firm must scrap ie impair them down to zero or are already fully depreciated at nil NBV with zero consideration: no gain or loss in their books (presumably)
They let him take away the item that he stores and the sells.
He thus treats them as inventory as they are stored;he pays zero consideration for them in the first place
The business needs a proper inventory management setup so I am looking to help there and I need to get a value on these assets as they are procured at zero consideration
So I was wondering would the value be the normal approach:lower of cost or NRV (IAS 2) refers.
Cost of purchase,incurred to bring to condition etc, which suggests transport and labour costs etc.
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
He claims he considers it as zero cost and I am waiting to see the accounts to see if thats the case,but the items must have a market value to begin with as they are then sold onAs part of my seeting up an inventory register i need to give acost to these assets as they are sold in a market,in which case there would be a profit per item to consider and/or
As he trades thse assets in a market they need to have an intial value to show profit per item sold and any discounts hes allowed,to be considered and as part of the matching principle the expenses and revenue for these items must be matched off in the same period,cost of good sold etc.
I am keen to see the accounts as to how this is done but if you could offer any clarity it would be appreciated
Thanks for any insights.
-- Edited by MPO on Sunday 25th of June 2017 04:07:46 PM
-- Edited by MPO on Sunday 25th of June 2017 04:26:29 PM
-- Edited by MPO on Sunday 25th of June 2017 05:04:04 PM
-- Edited by MPO on Sunday 25th of June 2017 05:08:03 PM
-- Edited by MPO on Sunday 25th of June 2017 06:29:53 PM
I did CIMA and AAT but have been out of the game for a while as I was working on producing accounts for a public body,this type of thing is probably more practice orientated.
Looked at IFRS 13, fair value mentions exit costs etc,but taht excludes inventories. Its this situation that concerns me,so I need clarification if possible.
Just wondered if anyone has encountered this situation as its not a donated asset,but just given away,as part of a contract to clear shops.These are non current assets as per IAS 16 that the firm must scrap ie impair them down to zero or are already fully depreciated at nil NBV with zero consideration: no gain or loss in their books (presumably)
They let him take away the item that he stores and the sells.
He thus treats them as inventory as they are stored;he pays zero consideration for them in the first place
The business needs a proper inventory management setup so I am looking to help there and I need to get a value on these assets as they are procured at zero consideration
So I was wondering would the value be the normal approach:lower of cost or NRV (IAS 2) refers.
Cost of purchase,incurred to bring to condition etc, which suggests transport and labour costs etc.
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
He claims he considers it as zero cost and I am waiting to see the accounts to see if thats the case,but the items must have a market value to begin with as they are then sold onAs part of my seeting up an inventory register i need to give acost to these assets as they are sold in a market,in which case there would be a profit per item to consider and/or
As he trades thse assets in a market they need to have an intial value to show profit per item sold and any discounts hes allowed,to be considered and as part of the matching principle the expenses and revenue for these items must be matched off in the same period,cost of good sold etc.
I am keen to see the accounts as to how this is done but if you could offer any clarity it would be appreciated
Thanks for any insights.
-- Edited by MPO on Sunday 25th of June 2017 04:07:46 PM
-- Edited by MPO on Sunday 25th of June 2017 04:26:29 PM
-- Edited by MPO on Sunday 25th of June 2017 05:04:04 PM
-- Edited by MPO on Sunday 25th of June 2017 05:08:03 PM
-- Edited by MPO on Sunday 25th of June 2017 05:10:41 PM
Not sure what the non current assets issue has to do with your pals position.
I can see you have asked this on AWEB and its been answered so will leave it there, except to add the following:-
Do you have a practice licence? Or MLR cover? If not you need to get MLR or its an imprisonable offence. Also make sure you get PII cover - friends will sue in the event of bad advice. Also - consider professional ethics and the stance on acting for friends (ie dont!)
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
The cost in your case was zero (unless there were purchase or conversion costs) in which case your carrying value of the stock is as you indicate, zero.
If you think about that it gives a true and fair view of the actual profit from eventual sale. Relating that back to the IAS terms that you reference that would fit in neatly with IAS18.
Hope that makes sense and welcome to the forum.
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.
sorry, crossed in the post. I must have just be starting as you posted.
Do you have a link to the Aweb thread (I can never find anything over there anymore since they had their "Upgade" (lol)). Want to see how close my answer is to theirs.
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.
This isnt being done on a commercial basis and its not official but informally thats all, as for the non current assets well these are the items that hes allowed to use as inventory,given away as scrap and he then sells.
The place needs some sort of inventory management and he mebtioned this during aconversation and I was making suggestions that he should set up one up even a basic excel sheet but the said items require a value which got me thinking,(to satisfy my own curiosity) hence the reason why I came here for any ideas as to the valuation of these current assets.
I have seen the AWEB answer which seems sensible,thanks for your time and advice.
Regards
-- Edited by MPO on Sunday 25th of June 2017 06:09:29 PM
sorry, crossed in the post. I must have just be starting as you posted.
Do you have a link to the Aweb thread (I can never find anything over there anymore since they had their "Upgade" (lol)). Want to see how close my answer is to theirs.
sorry, crossed in the post. I must have just be starting as you posted.
Do you have a link to the Aweb thread (I can never find anything over there anymore since they had their "Upgade" (lol)). Want to see how close my answer is to theirs.
Shaun.
No probs Joanne, found it.
They came to the same conclusion as me but missed that it may be the wrong standards being quoted or that the idea of lower of cost and NPV has gone.
__________________
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.
And we crossed again.... tut. just not got our timing right today :/
thanks for the link though. :)
__________________
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.
This isnt being done on a commercial basis and its not official but informally thats all, as for the non current assets well these are the items that hes allowed to use as inventory,given away as scrap and he then sells.
The place needs some sort of inventory management and he mebtioned this during aconversation and I was making suggestions that he should set up one up even a basic excel sheet but the said items require a value which got me thinking,(to satisfy my own curiosity) hence the reason why I came here for any ideas as to the valuation of these current assets.
I take it you agree with the AWEB answer and thats it then,thanks for your time.
Regards
Keeping repeating yourself and including things that have no relevance just result in folk switching off and not answering. Really not sure why you keep mentioning the non current assets issue - red herring. Doesnt matter where the items were in someone elses bal sheet.
I didnt say that I agree nor disagree with the Aweb answer, I just dont see the point in spending time on this when you have others doing so.
Giving advice even in a non commercial capacity can lead to being sued if the received of such advice gets into trouble with the authorities after following such suggestions.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
This isnt being done on a commercial basis and its not official but informally thats all, as for the non current assets well these are the items that hes allowed to use as inventory,given away as scrap and he then sells.
The place needs some sort of inventory management and he mebtioned this during aconversation and I was making suggestions that he should set up one up even a basic excel sheet but the said items require a value which got me thinking,(to satisfy my own curiosity) hence the reason why I came here for any ideas as to the valuation of these current assets.
I have seen the AWEB answer which seems sensible,thanks for your time and advice.
Regards
-- Edited by MPO on Sunday 25th of June 2017 06:09:29 PM
Just for any other readers
This post was edited after I answered. Last line originally read 'I take it you agree with the Aweb answer.....'
One of the reasons I didnt answer to the post at 16.05 was due to the number of edits being evidence over the course of approximately an hour. By then I picked up the post also on Aweb! No point us all running round trying to assist!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
The cost in your case was zero (unless there were purchase or conversion costs) in which case your carrying value of the stock is as you indicate, zero.
Yes, I had the answer as zero. It seemed easy enough, but I didn't know if I was missing anything.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I did CIMA and AAT but have been out of the game for a while as I was working on producing accounts for a public body,this type of thing is probably more practice orientated.
Looked at IFRS 13, fair value mentions exit costs etc,but taht excludes inventories. Its this situation that concerns me,so I need clarification if possible.
Just wondered if anyone has encountered this situation as its not a donated asset,but just given away,as part of a contract to clear shops.These are non current assets as per IAS 16 that the firm must scrap ie impair them down to zero or are already fully depreciated at nil NBV with zero consideration: no gain or loss in their books (presumably)
They let him take away the item that he stores and the sells.
He thus treats them as inventory as they are stored;he pays zero consideration for them in the first place
The business needs a proper inventory management setup so I am looking to help there and I need to get a value on these assets as they are procured at zero consideration
So I was wondering would the value be the normal approach:lower of cost or NRV (IAS 2) refers.
Cost of purchase,incurred to bring to condition etc, which suggests transport and labour costs etc.
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
costs of purchase (including taxes, transport, and handling) net of trade discounts received
costs of conversion (including fixed and variable manufacturing overheads) and
other costs incurred in bringing the inventories to their present location and condition
He claims he considers it as zero cost and I am waiting to see the accounts to see if thats the case,but the items must have a market value to begin with as they are then sold onAs part of my seeting up an inventory register i need to give acost to these assets as they are sold in a market,in which case there would be a profit per item to consider and/or
As he trades thse assets in a market they need to have an intial value to show profit per item sold and any discounts hes allowed,to be considered and as part of the matching principle the expenses and revenue for these items must be matched off in the same period,cost of good sold etc.
I am keen to see the accounts as to how this is done but if you could offer any clarity it would be appreciated
Thanks for any insights.
-- Edited by MPO on Sunday 25th of June 2017 04:07:46 PM
-- Edited by MPO on Sunday 25th of June 2017 04:26:29 PM
-- Edited by MPO on Sunday 25th of June 2017 05:04:04 PM
-- Edited by MPO on Sunday 25th of June 2017 05:08:03 PM
-- Edited by MPO on Sunday 25th of June 2017 06:29:53 PM
Further edit at 6.29. No idea what, but if anyone has time on their hands th can compare from the quotes X 2
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Apologies to all,especially Cheshire about any inconvenience. thanks
The IAS 16 was just added on as part of the wider picture and it wasnt my intention to confuse. no confusion here, but I think you were over thinking/over working it so hopefully any cofusion you had is now cleared up.
I was looking at this issue from 2 perspectives now: one for reporting and one for internal management of inventory
Thanks
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks Cheshire you were right,been having a bad day,happens to us all.
I have been away from the standards for too long,now is the time to brush up and re-educate myself.
I am not in a practice and was in the public sector in a different type of role managing multiple fixed asset regsisters,assisting the accountant for the monthly and yearly accounts
I would love to get in practice actually, although CIMA is not ideal,no vat or tax, nor any Sage eithe, so I may need to look at that.
