Difference between two types of costs

[433018]

I would like to know what the difference is between 'transferable costs' and 'assignable costs'.

In my syllabus the following explanation is given:

transferable costs:
"e.g. In December 2011, you have paid the rent for December2011/January2012. Only 50% of the rent may be booked in book year 2011 - half of the rent amount is transferred to the next book year using a specific account"
"transferable costs are 'delay' costs"

assignable costs:
"e.g. You make an invoice every fifth window washing service turn. In the past year you have already performed 4 turns and you need to take up the return of these in the current book year, even if the invoice is made next year."

"assignable costs are 'anticipation costs'"

I still do not understand the difference much. Could someone elaborate please?

--
Student in ICT

 

[kirby]

Those are two horrible, murky, unhelpful definitions. They involve the concept of accrual accounting, which aims to record expense in the period of benefit, regardless of the actual payment.
So note in"transferable cost" the payment has been made but the period of benefit involves January 2012, which is outside of your 2011 accounting year. So, at 12/31/11 you would record 1/2 of the payment as 2011 expense and half as a prepaid expense asset.
In "assignable costs" note the payment has not been made. So you would accrue the expense as a debit and offset by accrued expense liability as a credit.
Again, this instructor is making the accrual topic even more murky, good luck!

 

[Samir]

Yeah, it took me a bit to even figure it out, but kirby is dead-on--it's just some of the concepts of accrual accounting.

If you have a payment for two months of rent spanning two years in a single year, you'd have to break it up.

cr cash
db rent expense 50%
db prepaid rent (asset) 50%

Later in January
cr prepaid rent (asset)
db rent expense

For the case of the deferred income, same thing inverted:

db cash
cr sales for 4/5 of the total sale
cr prepaid sales (liability) for 1/5 of the total sale

In the next year:
db prepaid sales (liability)
cr sales

Someone correct me if I'm wrong! It's been years since I've listed out actual db and cr's!