01-28-2010, 04:42 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by ibin</i>
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<b>Please assist me on this accounting problem in relation to IAS 16</b>.
We have received a query from our Auditors that we expense some of the assets, which we term them as âminor assetsâ, we do have a policy of expensing some minor assets the policy says âExpenditures on furniture, office equipment, workshop tools and other minor assets are written off during the year of acquisition. However, they are recorded in memoranda registers.
<i>Auditorâs observation</i>
The company has been expensing major classes of Property Plant and Equipment such as Furniture and fixtures, computers, printers, etc contrary to the requirement of paragraph 37 of IAS 16.
<i>Our views</i>
We believe that we still in compliance with IAS 16 as the standard gives room for such a policy through paragraph 7 and 9
<u>ADDITIONAL INFORMATION TO MEMBERS OF THE FORUM</u>
Assets of furniture, office equipment, workshop tools and other minor assets are termed as minor when its individual item cost is less or equal to USD 10,000.
During the year under review 2008/2009 the Company incurred USD 817,957 to procure minor assets and the cost has been expensedâ.
Net Carrying Amount (Net Book Value)as at 30 june 2009 of our Property Plant and Equipment is USD 225,903,294.
Total assets USD 326,774,051
Total income USD 153,893,637
Total expenditure USD 108,970,398
Pre Tax Profit USD 44,923,239
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Dear
Standard does not prescribe the unit of measure for recognition.
There is always a provision to designates some assets as minor assets.
If you purchase a calculator it is not mandatory to capitalize although it is used for more than one year.
All companies establishes a threshhold amount for the capitalization of assets.
Only material capital expenditures needs to be capitalized.
If the threshold as determined by the company is not above the materiality level, it is ok
Your policy is not in contradiction with IAS 16. Thats what I believe. Also read para 9
Regards
Ahmed
<br />
<b>Please assist me on this accounting problem in relation to IAS 16</b>.
We have received a query from our Auditors that we expense some of the assets, which we term them as âminor assetsâ, we do have a policy of expensing some minor assets the policy says âExpenditures on furniture, office equipment, workshop tools and other minor assets are written off during the year of acquisition. However, they are recorded in memoranda registers.
<i>Auditorâs observation</i>
The company has been expensing major classes of Property Plant and Equipment such as Furniture and fixtures, computers, printers, etc contrary to the requirement of paragraph 37 of IAS 16.
<i>Our views</i>
We believe that we still in compliance with IAS 16 as the standard gives room for such a policy through paragraph 7 and 9
<u>ADDITIONAL INFORMATION TO MEMBERS OF THE FORUM</u>
Assets of furniture, office equipment, workshop tools and other minor assets are termed as minor when its individual item cost is less or equal to USD 10,000.
During the year under review 2008/2009 the Company incurred USD 817,957 to procure minor assets and the cost has been expensedâ.
Net Carrying Amount (Net Book Value)as at 30 june 2009 of our Property Plant and Equipment is USD 225,903,294.
Total assets USD 326,774,051
Total income USD 153,893,637
Total expenditure USD 108,970,398
Pre Tax Profit USD 44,923,239
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Dear
Standard does not prescribe the unit of measure for recognition.
There is always a provision to designates some assets as minor assets.
If you purchase a calculator it is not mandatory to capitalize although it is used for more than one year.
All companies establishes a threshhold amount for the capitalization of assets.
Only material capital expenditures needs to be capitalized.
If the threshold as determined by the company is not above the materiality level, it is ok
Your policy is not in contradiction with IAS 16. Thats what I believe. Also read para 9
Regards
Ahmed
