I'm curious as to whether it's normal practice to put the interest on monthly car insurances as a separate item or lump it all under car insurance, or doesn't it matter? i don't always see the amount separated, but on the one I'm doing it is, hence the question.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John, Hi Joanne hope you are both having a good start to the new year
Must admit never actually thought about separating it until this post, the insurance payments made by my clients are pretty low but I can certainly see the sense of separating it when dealing with large businesses as the actual credit costs must amount to a fair bit
-- Edited by Artois on Thursday 4th of January 2018 06:55:56 PM
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Yoh Doug
Deliberately slower start than usual after havng the lurgy over the break and frankly much in need of a rest!! Albeit - the piles are already mounting - I cannot see a single inch of my actual desk (and its a double desk in my office!!!!!)
Im debating jacking it all in and doing something else or ramping it up and getting staff. Decisions decisions - plus no time to really think about it all in 2017!
Hope you are having a good start.
__________________
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
Not a bad new year, but quiet, saw the new year in at home with the clan and my sister.
Out of interest Joanne (pardon the pun) would you apply the same treatment to a sole trader?
Hi Doug. Been pretty much in the same camp as you in not separating it out, but I do ponder the question every so often. Certainly I agree that for small traders the difference is negligible, but strictly speaking, I guess we should separate it.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John
I would separate - guess its the habit factor in part (and one I acquired after working with bigger businesses, given they looked at interest cover and otehr such ratios). But I also work on the basis that the sole trader might be small today but might be a large company/business tomorrow (well ok, slightly longer than that) so easier for long term consistency. I cannot now recall what the contract looks like, have to a client one out - but doesnt the document state that the payment is interest? Will see if I have one in my office, although I reckon the papers mightve now gone back to the clients. I tend to park it separately from Bank interest as it helps see the differences.
As long as you are consistent though I dont think there will be any major issue. Unless someone else can advise.
__________________
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
Yoh Doug Deliberately slower start than usual after havng the lurgy over the break and frankly much in need of a rest!! Albeit - the piles are already mounting - I cannot see a single inch of my actual desk (and its a double desk in my office!!!!!)
Im debating jacking it all in and doing something else or ramping it up and getting staff. Decisions decisions - plus no time to really think about it all in 2017!
Hope you are having a good start.
Hi Joanne
How can you be thinking of packing it in when your in line for the bookkeepers quadruple next year (Don't let Guardiola know he thinks he's the only one going for it) but if you do how about a Cake shop??
Yes I am having a good start, only two clients accounts left to do one has been in touch and will be getting me all I need over the next week the other will be getting an email explaining the penalties for late filing plus got 2 potential new clients arranged for meetings next week, so I have called it a day and while the house is peaceful I am sitting down doing a jigsaw and listening to U2
Hi John
Yes agree since this post I will be separating in future, I am sure I don't need to mention this but usually if my client sole traders buy/use a car then I find that claiming the mileage works out more beneficial (depending how it has been accounted for in the past of course)
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Pep aint gonna do it (she says, fingers, ties and everything else crossed).
Lol the cake shop would be ok if you didnt want them looking too pretty. The bake is ok, the look from a distance is usually ok, but not for great close up inspection (in most cases anyroad!). Im just not that arty. Although my sister outlaw reckons I should just set up a shop to sell my puff pastry sausage rolls (no not Greggs!)
Wish I could do a jigsaw! Very therapeutic! As long as its not a 1000 piece round one of a tin of beans (or some such!)
Sounds like you are on it with the work pile so I hope you had a relaxing day of peace (and no missing jigsaw pieces!)
The new avatar is a wee bit angry looking!
__________________
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
Pep aint gonna do it (she says, fingers, ties and everything else crossed).
Lol the cake shop would be ok if you didnt want them looking too pretty. The bake is ok, the look from a distance is usually ok, but not for great close up inspection (in most cases anyroad!). Im just not that arty. Although my sister outlaw reckons I should just set up a shop to sell my puff pastry sausage rolls (no not Greggs!)
Wish I could do a jigsaw! Very therapeutic! As long as its not a 1000 piece round one of a tin of beans (or some such!)
Sounds like you are on it with the work pile so I hope you had a relaxing day of peace (and no missing jigsaw pieces!)
The new avatar is a wee bit angry looking!
Hi Joanne
The avatar is the Paddington Bear hard stare from the film, needed to change it from the New Year celebrations and for some reason chose that, Any ideas for a new theme?
Jigsaw going well not a 1000 piece tin of bins but a 1000 piece picture of loads of beer bottles, bought by my kids who for some reason think I can relate to that sort of thing (no idea why)
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
The inital question is an interesting one in that the answer is different depending upon the fiancial reporting standards that the accounts are being prepared to.
If prepared to IAS (IAS23 Borrowing costs to be precise) then if the interest formed part of the transaction that could not be avoided then it was part of the cost and would not be seperated. Think of a computer where it comes with a warranty that in itself is worth £100. If the computer was not available without the warranty then the warranty itelf forms part of the cost of the computer which is non seperable. Some sellers use that sort of trick to make an item seem cheaper than competitors whilst in reality the price is at least the same.
If accounts are being prepared to FRS102(specifically section 25) then the adopted poilicy of whether to expense seperately is optional. However, if a policy of seperate recognition is adopted then that should be considered a general policy rather than item specific.
Conversely, if accounts are being preared to FRS105 (specifically section 20) then the interest expense will always be seperately recognised as an expense through the P&L
On a completely seperate note I wonder why the client is putting car insurance through the business as that is effectively saying that they will not be claiming mileage allowance. Is this a company van rather than a car?
kindest 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.
Im debating jacking it all in and doing something else or ramping it up and getting staff.
Must be something that they've put in the water!
Similar conundrums here. As you know I've been working with real size clients and it's been soooo nice not to have to hold their feet over hot coals or hold their first born to randsom until they admiit where their documentation is.
Current clients just a short term gig but its really making me ponder a return to banking operations... And this time I've now actually read the Basel acords (actually, bank management might not like that!).
I keep thinking that being in practice would be so good if it wasn't for the damn clients!
Good luck with whichever way your decision falls... Not that you need it. You make your own luck simply by always being the best at whatever you do (see your signature panel!).... I would say see you back at NW but it seems to be B that are sniffing around me at the moment.
All the best for 2018 hun.
Shaun.
p.s. not awol. Just no time to get sucked into posting (these things never end up as single posts). I do read through the posts everyday though just to see what fun you guys n gals are having.
__________________
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.
The inital question is an interesting one in that the answer is different depending upon the fiancial reporting standards that the accounts are being prepared to.
If prepared to IAS (IAS23 Borrowing costs to be precise) then if the interest formed part of the transaction that could not be avoided then it was part of the cost and would not be seperated. Think of a computer where it comes with a warranty that in itself is worth £100. If the computer was not available without the warranty then the warranty itelf forms part of the cost of the computer which is non seperable. Some sellers use that sort of trick to make an item seem cheaper than competitors whilst in reality the price is at least the same.
If accounts are being prepared to FRS102(specifically section 25) then the adopted poilicy of whether to expense seperately is optional. However, if a policy of seperate recognition is adopted then that should be considered a general policy rather than item specific.
Conversely, if accounts are being preared to FRS105 (specifically section 20) then the interest expense will always be seperately recognised as an expense through the P&L
On a completely seperate note I wonder why the client is putting car insurance through the business as that is effectively saying that they will not be claiming mileage allowance. Is this a company van rather than a car?
kindest regards,
Shaun.
If Ive read it correctly then - for vehicle insurance then interest charge for spreading payments would be separated under IAS, FRS105 and FRS102 (notwithstanding the fact that we should not be item specific in the latter case) as the interest payable is not a contractual component of taking out the insurance?
__________________
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
Will be sorry to see either of you go. Joanne, if you can afford to do it I'd ramp it up and staff it, then you can pick and choose the jobs you enjoy. Whatever you both decide, please stick around these parts, both of you have a wealth of information and you'd be sorely missed, that's for sure.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
The inital question is an interesting one in that the answer is different depending upon the fiancial reporting standards that the accounts are being prepared to.
If prepared to IAS (IAS23 Borrowing costs to be precise) then if the interest formed part of the transaction that could not be avoided then it was part of the cost and would not be seperated. Think of a computer where it comes with a warranty that in itself is worth £100. If the computer was not available without the warranty then the warranty itelf forms part of the cost of the computer which is non seperable. Some sellers use that sort of trick to make an item seem cheaper than competitors whilst in reality the price is at least the same.
If accounts are being prepared to FRS102(specifically section 25) then the adopted poilicy of whether to expense seperately is optional. However, if a policy of seperate recognition is adopted then that should be considered a general policy rather than item specific.
Conversely, if accounts are being preared to FRS105 (specifically section 20) then the interest expense will always be seperately recognised as an expense through the P&L
On a completely seperate note I wonder why the client is putting car insurance through the business as that is effectively saying that they will not be claiming mileage allowance. Is this a company van rather than a car?
kindest regards,
Shaun.
If Ive read it correctly then - for vehicle insurance then interest charge for spreading payments would be separated under IAS, FRS105 and FRS102 (notwithstanding the fact that we should not be item specific in the latter case) as the interest payable is not a contractual component of taking out the insurance?
With IAS, not if the only option was payment by interest bearing instalments (those pay as you go type insurance policies come to mind).
With FRS102 its optional but consistency of treatment must apply.
With FRS105 it must be expensed seperately.
In the bulk of cases as you say expensing seperately is the most consistent treatment but I wanted to emphasise for the wider readership that as with most things in this business its not quite a black and white decision.
__________________
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.
Will be sorry to see either of you go. Joanne, if you can afford to do it I'd ramp it up and staff it, then you can pick and choose the jobs you enjoy. Whatever you both decide, please stick around these parts, both of you have a wealth of information and you'd be sorely missed, that's for sure.
Worry not John, as far as the site goes I for one am not going anywhere and I don't think that Joanne would either. Whichever direction my career takes I'll still be around on here... How mundane life would be if I couldn't give training companies a hard time every now and again
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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.
Hi Shaun - Never heard of the pay as you go insurance before, learn something new everyday. Re the NWB - go get em, but ask how many of the RBS numpties you will have to deal with and if indeed the systems are RBS (crap) or NWB (old, but way better). Ive no intention of going back into Corporate - its carnage there at the mo with a mahoosive chunk of it shipped offshore (they will be back, as they always are), but I might consider being a 'consultant' but only if I dont have the commute (so it aint gonna happen).
Hi Doug - I think favourite booze should be the new avatar - you could post your jigsaw pic when youve finished it. Mine's up there, so easy! Besides turning to drink in this business makes it a bit more palatable.
John - thank you for such kind words. I need proper time to ponder. Problem is not the affording it - its finding a suitable place and then managing all the IT rubbish. Oh and dealing with staff! Wish my son was still able to work with me!
-- Edited by Cheshire on Saturday 6th of January 2018 06:28:49 PM
__________________
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
Hi Doug - I think favourite booze should be the new avatar - you could post your jigsaw pic when youve finished it. Mine's up there, so easy! Besides turning to drink in this business makes it a bit more palatable.
Hi Joanne, jigsaw completed
__________________
Doug
These are only my opinions of how I see things and therefore should not be taken as advice
(actually, bank management might not like that!). 
