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Dear Sir
This was what happened at work and I am not sure if the treatment was right.
Our company provide leased vehicles to staff and the lease contract normally lasts for 36 months. We have to pay 3 month rental as initial payment plus a month’s rental and the final 3 months leading up to the end of the 3 year contract will be rent free. My finance manager has decided to post the initial 3 months rental as prepayment (which I agree) but not to release it until 33 months later.
My understanding is that prepayment is a current asset. If we were to do what the manager suggested, it seems to me that this prepayment would become a non current asset. Is this in compliance of the IAS,IFRS or U.K. GAAP?
Please advise.
Kind regards
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