FRS5/SSAP9/UITF40

FRS5/SSAP9/UITF40

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Apologies for this but having had to read FRS5/SSAP9/UITF40 in respect of a trading client who has short-term contracts and some speculative work my understanding is that the sales value of the incomplete work relating to the contracted work should be recognised in the accounts at the year end thereby offsetting related costs incurred to date to leave attributable profit and leaving no WIP - only holding stocks being the main constituent of the generic  "closing stocks/WIP" figure ie applying FRS 5 as contracts are in place - wheras UITF40 generally only applied to services. If no contract is in place SSAP9 applies ie to the speculative work where no buyer in place - has there been any change to my understanding? - thanks

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By Towards excellence
05th Apr 2011 10:12

Broadly, I agree

I'm not sure I understand you fully, but, broadly, the effect of the UITF 40 was to replace costs carried forward with a debtor: this debtor was the value of right to consideration in respect of work completed or in progress.

Was this your question?

SA

 

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By hfc1875
05th Apr 2011 10:51

Thanks SA
apologies previous post bit rushed - but yes your answer confirms my understanding where there is a contract" for work in place whether it be short or long - then its a debtor/sales adj - re FRS5.
I was also looking at where the old rules of bringing in the cost of wip under SSAP 9 would apply eg now only in non-contract work or speculative work as I have understood it since FRS5 came in.
and finally that UITF40 only applied to service contracts? thanks again for input

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