A limited company client incurred a large amount of repair expenditure on a property that they are tenants of. It was agreed that they would pay for 100% (say £20,000) but would bill the other tenants in the building for their 50% share (say £10,000). The amounts are material.
Do I show:-
(a) £20k repair expense and £10k revenue, or
(b) just £10k repair expense?
If £10k revenue, just show as part of regular sales or under some other category?
Replies (3)
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The clue is
"Their share"
This implies to me that their cost is £10,000 and the other £10,000 was processed as agents for the other tenants.
Looking at it another way there is no opportunity or intetion to profit from the work.
I would show the net figure.