A man wants to buy 100 cars, which have a list price of £15,000. He is offered them at a discount of 40% of the list price of the car. Which means that the cost per car is £9000. In the Fixed Assets of the Balance Sheet, is £9000 x 100 cars listed, or £15000 x 100 cars listed, and why?
2006-09-17 03:00:15 · 3 answers · asked by g s 1 in Business & Finance ➔ Corporations
9000x100 because this is the actual amount he has to pay for.
2006-09-17 03:09:36 · answer #1 · answered by cgobio 2 · 1⤊ 0⤋
I'm guess it would be £15000 x 100, because that's the VALUE (subject to any depreciation) of the assets, whereas £9000 x 100 is the COST of the assets.
But then, I am right in the middle of one of my employers CBTs "Why Finance Matters". So I'm hardly an experienced expert :-)
2006-09-17 10:17:35 · answer #2 · answered by dryheatdave 6 · 0⤊ 1⤋
You should record the acquisition price of the car, NET of any discounts whether taken or not. So, that's 900000 pounds (9000x100). If you have any direct attributable cost in purchasing the asset, you should add those to the purchase price of the said asset.
Int'l Accounting Standards 16 (IAS16)verse 15, states that "Cost includes all cost necessary to bring the asset to working condition for its intended use."
2006-09-17 10:11:15 · answer #3 · answered by ? 5 · 1⤊ 0⤋