Property trading

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Hi everyone I wonder if anyone could help.

I have a client who is property developer and also ltd company- purely buying and selling for a profit, not rental.

One property was bought in the  accounting period for which  I am preparing the accounts for and refurbished and then  sold in next accounting period.

My questions are:

  • In terms of costs classification- what is the purchase and refurbishment costs classed as?  and where do they go on balance sheet/profit and loss? I am right in thinking that property purchase cost and subsequent refurbishment costs  are work in progress and should  be show on balance sheet under current asset? Also what about other costs like accountancy fees, legal fees , travel expenses , use of directors home as office etc ?
  • The directors (wife and husband) funded the purchase of the property- they confirmed that the had savings and they transferred equal amount of money from their personal bank account to business bank account and the property was paid for from this money. Should I seek additional information for the source of this money ? or  just credit  it to DLA as a loan to a company.

Thanks

Replies (5)

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paddle steamer
By DJKL
15th May 2019 10:08

Methinks it is inventory rather than WIP and you ought to read sec 13 FRS102 or sec 10 FRs105 re overhead allocation to same.

https://www.frc.org.uk/getattachment/69f7d814-c806-4ccc-b451-aba50d6e8de...(March-2018).pdf

https://www.frc.org.uk/getattachment/fb775a35-08b0-41ad-b164-ff0414a61e3...

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By Bobbo
15th May 2019 17:16

Zibi wrote:

accidental travel expenses

Please tell me more about these

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Replying to Bobbo:
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By Tax Dragon
15th May 2019 17:58
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By Wanderer
15th May 2019 18:02

Brilliant!

Do you reckon they are tax allowable?

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By Tax Dragon
15th May 2019 18:12

Sadly not. The expense comes in getting home.

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