I'm preparing FRS105 accounts for a business that provides a service to its customers and in doing so incurs several service costs (no products involved). My client does not invoice it's own customer upfront or mid-way, only once the full service has been provided.
At year-end there are several service costs incurred relating to contracts not delivered until after year-end. Are such costs carried forward as Work in Progress (Dr. B/Sheet, Cr. P&L)?
Replies (6)
Please login or register to join the discussion.
Hi - have a look at sections 18.13 - 18.15 of the FRS
https://www.frc.org.uk/getattachment/fb775a35-08b0-41ad-b164-ff0414a61e3...
Yes of course you carry them forward, but I’m not sure they are WIP. Are they specific disbursement invoiced on to the client at a later date? Or are they just costs incurred by your client in providing its service to the client?
Definitely not stock. You can’t pick them up and throw them around can you?
Either WIP or trade debtors. For the disbursements I would incline to the latter.
Hi again - the standard actually requires you to recognise revenue earned to the date of the accounts, ie on partially completed contracts, but there may be a reason why you just carry forward the costs.