hire agreement or HP

I'm waivering ...

Didn't find your answer?

A brewery client has passed me an invoice & hire agreement for about 1,000 beer kegs. It's a 6 year agreement which can be broken or the kegs purchased after 3 years, or continued to the full term, then purchased or returned. My client still has to pay if kegs get broken/lost etc. The 2 (different) purchase prices seem a reasonable market value for that age.

From reading the agreement, I was leaning towards capitalising the kegs to the value of 3 years worth of monthly payments. However, there will be monthly invoices for X + VAT, so now I'm thinking plain P&L expense.

What would you do?

Secondary questions - what Sift 'tag' would you have put to this post? There's no HP, fixed assets etc, so I ended up with bookkeeping ...

Replies (2)

Please login or register to join the discussion.

RLI
By lionofludesch
01st Jul 2021 17:56

I'd've gone for Water Cooler.

Thanks (0)
avatar
By frankfx
01st Jul 2021 18:00

https://www.accaglobal.com/my/en/student/exam-support-resources/fundamen...

As good a starting point as any.

Finished off with a craft hoppy beer, perhaps.

Let us know your conclusion in the light of your full barrell of knowledge.

Thanks (0)