UK Income or not?


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Hi everyone,

A question came up at work that I'm hoping you can help me with

we are in collaboration with a 3rd party, we agreed to pay for something (in this case flights) with the expectation that the 3rd party would refund us the cost

so we had someone fly over to this company (it's easier for us to pay for our person as we have all the personal details of our colleague, it's faster and efficient if we do it) then we invoice them the costs with a receipt of the flight.

should this invoice be treated as income? if it is we are reporting more expenditure than we really incurred however it is countered off by the income. is there any accounting rule on this? also if it is counted as income is this treated any differently?

Thanks for all your help
Dan
 
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kirby

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Invoice is not income. Record the credit to the same account that holds the expenditure for the flight.
 
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That's what i thought, I need to tell let my boss know. Is there any literature I can use to support this?
 

kirby

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The above is one support based on acctg policy of an organisation. You will not find an IFRS formal statement on this exact topic as it is commonly understood to be the correct method, and usually not a big deal. Also, logically an expense reimbursement is not “income”, as defined. To record this to income overstates income and overstates expenses.
 
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Kirby you legend, you have made me look smarter and more thoughtful than I genuinely am

Thank you
 

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