I wouldn't have thought whether the money could be recovered defines whether it is a prepayment.
It's that it is an amount paid which will give rise to economic benefit or some sort after the year end.
Presumably for this business having access to an overdraft facility in 2020 provides such benefit.
If this fee is to retain the overdraft facility during 2020 (or at least until some date in December when the next annual renewal is due) I vote prepayment.
Oh so is it against the rules here to ask for help or something?
Do we all have to be experts?
I personally don't mind the 'freeloader' questions too much but Accounting Web is a community for "accounting and finance professionals". Experts may be too bold a term but certainly some knowledge is expected!
You may be better off on UK Business Forums which is aimed towards the business owner rather than accountant.
I assume the £4 should say £4,000. Are these figures for payments correct though? It suggests total payments of £56,800 (£4k + £24k + £800x36) when the price of the car is £60,000 (£50k plus vat). Would have expected the total payments to at least equal the price of the car, if not exceed it.
I understand your points and reiterate that I really do not know IFRS 16 (or any other IFRS!) other what I've read in a piece by EY found on google.
However, in the OP's case no mention is made of an option being exercise to renew the lease (though this doesn't mean that isn't what's happening). Therefore, *without making assumptions* as to what's in the lease (and being a 12 month term is this potentially a licence not a lease - if that makes any difference), surely all we can say is that its a 12 month lease being replaced by a 12 month lease every year?
Just a thought - grateful for any input you may have.
Worth considering carefully Paul's comments about is it really a 12 month lease given the pattern of renewals.
However, IF you end up being entirely content that the recurring 12 month leases can be looked at as standalone leases - does IFRS 16 not provide an exemption from recognition for short term leases (12 months or less)?
Note: I have zero experience of IFRS 16 other than having just googled it.
Think that has been rapidly corrected because as I read it now it very clearly says "reintroduce a small profits rate for firms with profits under £300,000 a year"
That small profits rate being 19% then rising to 20% then 21%.
My answers
I read Wilson's response as the opposite.
That Wilson is agreeing with Wanderer who agreed with your instinct that for credit accruals CT61 was not required.
I wouldn't have thought whether the money could be recovered defines whether it is a prepayment.
It's that it is an amount paid which will give rise to economic benefit or some sort after the year end.
Presumably for this business having access to an overdraft facility in 2020 provides such benefit.
If this fee is to retain the overdraft facility during 2020 (or at least until some date in December when the next annual renewal is due) I vote prepayment.
I personally don't mind the 'freeloader' questions too much but Accounting Web is a community for "accounting and finance professionals". Experts may be too bold a term but certainly some knowledge is expected!
You may be better off on UK Business Forums which is aimed towards the business owner rather than accountant.
I assume the £4 should say £4,000. Are these figures for payments correct though? It suggests total payments of £56,800 (£4k + £24k + £800x36) when the price of the car is £60,000 (£50k plus vat). Would have expected the total payments to at least equal the price of the car, if not exceed it.
What existing company?
I understand your points and reiterate that I really do not know IFRS 16 (or any other IFRS!) other what I've read in a piece by EY found on google.
However, in the OP's case no mention is made of an option being exercise to renew the lease (though this doesn't mean that isn't what's happening). Therefore, *without making assumptions* as to what's in the lease (and being a 12 month term is this potentially a licence not a lease - if that makes any difference), surely all we can say is that its a 12 month lease being replaced by a 12 month lease every year?
Just a thought - grateful for any input you may have.
Worth considering carefully Paul's comments about is it really a 12 month lease given the pattern of renewals.
However, IF you end up being entirely content that the recurring 12 month leases can be looked at as standalone leases - does IFRS 16 not provide an exemption from recognition for short term leases (12 months or less)?
Note: I have zero experience of IFRS 16 other than having just googled it.
It amuses me that the company is referred to several times as 'Brightgate' in that document.
Think that has been rapidly corrected because as I read it now it very clearly says "reintroduce a small profits rate for firms with profits under £300,000 a year"
That small profits rate being 19% then rising to 20% then 21%.
Why is this other company sharing the costs? What's their interest in the review of the play?