Revision of Current Asset to Fixed Asset

Discussion in 'General Accountancy Discussion' started by Lindyloo, Nov 18, 2013.

  1. Lindyloo

    Lindyloo

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    I am taking over the annual accounts of a Club - unincorporated with current CT204. Over 10 years ago an asset was purchased and the cost shown in Current Assets as "Investments". It is thought the reason for this was the purchase was considered an investment by the club. The committee now want the asset to be shown as a Fixed Asset. As the asset is a lake - thus not subject to depreciation, and freehold, so no amortisation - I can see no reason why it cannot be transferred to Assets - and at some stage in the future suggest a revaluation would be appropriate.
     
    Lindyloo, Nov 18, 2013
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  2. Lindyloo

    Fidget VIP Member

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    Even if it was purchased as an investment, it would only be a current asset if it was a short term investment about to be realised and since it's been on the books for 10 years, I'm thinking that it should've been reclassified long ago, if not from the outset.

    It sounds to me that it meets the definition of an Investment Property under IFRS ie not held for use in the ordinary activities of the club, but for capital appreciation. In which case it would be accounted for under IAS 40. As far as I'm aware, there's no equivalent to IAS 40 in US GAAP, so I'm not sure how it would be treated under US GAAP. If it is used in the ordinary activities then the accounting treatment for Property, Plant & Equipment would apply.

    Either way, it doesn't belong in current assets.
     
    Last edited: Nov 18, 2013
    Fidget, Nov 18, 2013
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