Ireland What to do here?


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Accountancy service here in Ireland , looking for general advice

We have a client who has his own LTD company.

We issued from his LTD company (ABC LTD) Invoices for his services over the period March to Present for net plus 23% vat as standard to his customer (EFG LTD)

Our client/the director of the company (ABC LTD) contacted us today to say he is purchasing a piece of work machinery from the same company he is providing professional services to (EFG) worth in the region of 9k plus 23% vat

No problem says us, get the invoice from them sent over to his LTD company
and when his company has the funds, we will make payment from his company bank account for the 9k plus vat.

he said he is already after paying 2k from his own current account to them towards the asset and
says, the company who owes him about 15k for services anyway is just not going to pay his invoices for the balance of the asset (to square each other up) and call it that.

I'm lost what to do here?

Do I credit note the sales invoices for services for his work for the period for the exact amount of the balance of the asset (net plus vat)
and reimburse the director 2k plus vat amount from company funds as an expense reimbursement for his contribution towards the work expense?

also, on a side note the expense isn't an asset of the company nor did the company purchase it at all?(but rather reimbursed the director for a % of the cost he paid directly)

any advice would be great
 
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The cost incurred by the directors is in respect of the asset which is to be used for business purposes. Just imagine if the company would have paid the 2K directly to the customer, then based on the definition of fixed asset, the cost incurred could have been capitalized. The amount of 2k shall be treated as an expense or asset (if work machinery is fixed asset) and correspondingly an advance from employee shall be created in the books at the date of transaction. Once reimbursement is made, the advance from employee will be settled through cash or bank.
 
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