They happen, of course, but it’s the question of what happens with those entries that’s important. Obviously it’s the default objective to make sure that no such entry ever happens, however once they do happen, it’s how you remedy the situation that’s significant. Continue reading
Author Archives: Karl
System, system, system
Just recently I had an opportunity to look into detail of an accounting system. Not software, but the actual system when it comes to managing paperworks, invoices, bank extracts etc. There was a system and I was assured I would be able to find everything I needed with one specific number. Needless to say I was happy imagining I would only need an hour for the job in hand. Continue reading
Credit invoices and reliable measurement of cost
I can see where the question arises from. You know you’ll be issued a credit invoice (or you’re fairly certain it will happen) and you question whether you should recognize the asset. Remember here that the conditions for recognizing an asset (as also referenced in IAS 16) are as follows: (1) it is probable that future economic benefits associated with the item will flow to the entity and (2) the cost of the item can be measured reliably. Continue reading
Treating supplier credits for acquired assets
Sometimes it is so that you buy an asset, you start a dispute over the price, but since you really need the asset and you want to use it right away, you start using and accounting for it in your books regardless of the ongoing disputes of the price. What you do, is debit the assets and credit the payables. Continue reading
Treating supplier credits for expenses and inventories
How does one come about treating supplier credits in their accounting? You’ve already accounted for the expense or the asset and now you obtained a credit for it.
The idea behind a credit invoice is usually decreasing the initial amount, hence the word “credit”, however note that the treatment, whether it’s a credit invoice or an additional invoice (that is to increase the expense), the treatment doesn’t really change. Continue reading
Declaring taxes, tax accounting
Taxes in most countries are a normal part of every business, your sales are taxed, you have to pay certain fees for certain activities (i.e. point of sale, waste producing etc.) or your profits are taxed. Remember, it could be you’re subject to all of those taxes and more. In most countries you’d also be liable for withholding and paying taxes on payroll expenses. In short some could say that each and every step can be taxed. Whether they are, is part of a countries own legislation and political judgments, but matter of fact is that when doing business, you’re subject to some kind of tax. Continue reading
My property, plant and equipment list – by invoices or by assets
I could ask if you’re using assets or invoices. If the invoices are for unique assets on their own and not one single asset consists of two or more invoices, then sure, let it be. However, there are pitfalls if the latter is not so and some assets comprise of various invoices.
I understand why such a situation would arise – lack of system support, i.e. you keep your list in Excel, lack of time to compile actual assets from all the invoices you’ve capitalized etc. Matter of fact is however that it’s not a preferred way to treat your PPE assets even if it seems perfectly okay for you. Continue reading