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Hello sir,
When we give one particular equipment as loan to customer. How we treat it as inventory or ppe?
Regrds thank you
If it’s loaned out, ppe
If it’s leased out, then,
operating lease, ppe
finance lease, receivableIf customer just borrowed it for a day, ppe
If asset is of the kind with which we deal in the ordinary course of business, inventory
Ok?
The item is given as loan to the customer to check and it can turn to sales or even return. We treat it as inventory right?
It’s a temporary loan of some equipment, not warning any money and always scheduled to be returned to us?
It never leaves our books?
IAS 16 is complied with – it was our asset, it still is our asset and, until we sell it, it will continue to be our asset
What’s the problem?
The problem was the auditors for this issue insist it should not be treated as inventory but as ppe.
You say it’s a problem? The auditors appear to be agreeing with me (or I’m agreeing with them!)
Why is that a problem?
Well if loan item not yet sold not return from it . i treat as stock. Auditors say i should treat it as ppe. I dont agree.
This seems to depend upon the business of the company that is doing the lending
Is it a company that ordinarily buys and sells items of equipment of the same description? Or is it a company that is looking to get rid of a piece of equipment that is now surplus to their requirements?
The answer to your original question is totally dependent upon the answer to the question that I have just raised
However, we now come to a different but related issue! To which name and address shall I address the invoice for giving you professional advice about a practical problem that you have encountered through your work?
This website is to assist students to pass their accountancy examinations. It is not intended as a sounding board to obtain advice in order to enable you to stand up against the auditors
At the heavily discounted rate of €50 per response, I calculate the amount owing before value added tax to be €250 but, if you pay within 10 days of invoice, you can deduct 10%
Listen children ! until you confirm your sales , you should record it as PPE .
Now if your business is like vehicle sales , you are qualified to record it as inventory .
And I too deal with auditors but never bring such an idiotic bargain.” how to manipulate PPE into inventory ?” is your real question . Lets work to find it out .
On top of it , your sales is not confirmed yet .
Can I say my auditor that 5 machines & 5 vehicles of my company is ready for sale & we are making a bargain , so I want to put it into inventory . And we do sale old machines and vehicle every year . Sometime new machines too. Are they my inventory ?
Did you think requirement for asset to be “an inventory “?And tutors without a doubt you are funny person , debating with him . lolz
I couldn’t work out what the nub of the question was! We’re trying to convince the auditors that our PPE is in fact inventory? Is that what’s happening?
The correct treatment is entirely dependent upon the nature of the entity’s business! As I have already indicated in earlier replies.
I can’t see that any further correspondence is called for.
Have a good new year celebration 🙂
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