scope of prepaid exp
This query is : Resolved
04 August 2009
would you please tel the scope of prepaid expenses.. wat and all includes in it.
1)whether the amt paid towards reneual of digital signature for two years, need to classify as prepaid or not .
2)uniform supplied to staff which is used for two years , need to classify prepaid or not
expecting professional ans
1)whether the amt paid towards reneual of digital signature for two years, need to classify as prepaid or not .
2)uniform supplied to staff which is used for two years , need to classify prepaid or not
expecting professional ans
04 August 2009
Prepaid expenditure can be defined as the portion of a payment that relates to the value of services to be received in future accounting periods which will gradually expire or be used up over time. The assessment of prepaid expenditure is an important requirement of accrual accounting. Prepaid expenditure is included as an asset in the financial statements prepared by an entity.
In view of the above items 1) and 2) can be considered for segregating current/prepaid expenditure.
Views of other experts are solicited.
In view of the above items 1) and 2) can be considered for segregating current/prepaid expenditure.
Views of other experts are solicited.
05 August 2009
thank you sir but in second case how you classify prepaid portion. on which basis
05 August 2009
U may apportion the Cost of uniform on time basis.
05 August 2009
Hi,
Uniform expenditure, digital signature expenditure being misc expenses in nature may not be treated as prepaid expenditure. It is better to write it off in the year of expenditure itself. Uniform may or may not be used for more than 1 year therefore correct way is to treat such items as revenue expenditure.
Uniform expenditure, digital signature expenditure being misc expenses in nature may not be treated as prepaid expenditure. It is better to write it off in the year of expenditure itself. Uniform may or may not be used for more than 1 year therefore correct way is to treat such items as revenue expenditure.
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