- This topic has 3 replies, 2 voices, and was last updated 3 years ago by
.
- Posts
Sir is it correct that a prepayment which will be settled with in 12 months will be treated as current asset
and that prepayment which will be settled after 12 months will be treated as fixed asset.
And for prepayment of more than 12 months, how will it he accounted for, should we treat a part of prepayment with in 12 months as current asset and part over 12 month as fixed asset or the whole amount should be treated as fixed asset.
Pls sir explain it with a bit explaination if it is frasable for you. Thank you.
IAS 1:
Current assets are assets that are: [IAS 1.66]
expected to be realised in the entity’s normal operating cycle OR held primarily for the purpose of trading OR expected to be realised within 12 months after the reporting period OR cash and cash equivalents (unless restricted).
All other assets are non-current. [IAS 1.66]
So theoretically you could split prepayment up.
All the examiner would look for is that you know (some of!) the definition of current asset. If you put that down, you won’t be losing marks.
- The topic ‘Prepayment’ is closed to new replies.