Stock valuation - bit of an unusal one or I'm being a muppet
Firstly apologies if this is covered elsewhere I did have a good look but could not find anything - first time posting.
I have just taken on a new Ltd Company client. The company is 3 years old - the accounts I am preparing are the third set for the year ended 31 December 2010, I have just taken them on from another firm.
The company is made up of 1 director who has invested £150k as a directors loan. The company buys equity shares in FTSE100 companies, holds them for anywhere between 3 months and 18 months and then sells them - pretty simple.
The previous accountants recognised revenue on the completion of a company share or investment transaction for example, they buy £1,000 of shares in company X in 2009, these are then sold in 2010 for £1,200, the £200 revenue is recognised in the YE 31 Dec 2010 accounts.
That's the background so my question is; if the company holds £100,000 of shares (stock) at the year end in 2009 and nothing changes in the company at all apart from the shares going up and down in value, at the end of 2010 the shares are worth £90,000 - obviously the stock figure will decrease by £10,000 but what is the other side of the double entry?
Does it effect the profit and loss this year, do I need to make an adjustment to last years retained P+L, do I create a stock revaluation account or something like you would when a company holds different currencies??
Sorry if this is quite a simple question but I've been staring at excel spreadsheets and bag loads of share info all day and my head is about to explode!!
Thank you for any help or advice you can give - really grateful!
- Starting new accounting business 304 6
- Leaving the flat rate scheme 142 4
- error on companies house accounts 735 18
- RTI penalties 89 1
- ACCA, ACPA, IFA, ICPA 515 7
- Bookkeeping software for cafe and VAT 152 2
- How do we get US withholding tax back? 309 5
- US Sales Tax 112 1
- Does SMP and SPP go up if leave goes across 2 tax years? 368 15
- Anti- Money Laundering - CIMA Practising Certification Application 199 3
- Simplified auto enrolment? 148 1
- Group Relief 130 4
- R&D Credits 104 1
- Is the annual Money Laundering Payment tax allowable 251 7
- VAT Reg.for sole trader with 2 S/E 132 2
- Clients 684 14
- Advice needed on my practice but not my clients 326 4
- Is a property owner charging a peppercorn rent to a limited company acceptable 465 10
- Sage Payroll 121 1
- SAGE 50 - Invoice Date 119 2
- QROP pension input amounts 501
- HMRC BENCHMARK EXPENSES 482
- write off loan or loan to equity swap or both 445
- EPS and CIS deductions 299
- Sole trade business in UK, but the owner works from EU 291
- Construction CIS LLP Company 284
- Stamp duty on house transfer between spouses 249
- Lets hear it for HMRC! 208
- SAGE winforecast 204
- LIVE: Budget aftermath webinar 187