Uitf 40
Gem7321
Registered Posts: 1,438 Beyond epic contributor ๐งโโ๏ธ
Hi
I hope someone can help me.
Today at work I have been completing my first set of LLP accounts, and came across UITF 40 for the first time. Can someone explain to me what this is? All my manager said is "it's basically another capital account".
Thanks
Gem
I hope someone can help me.
Today at work I have been completing my first set of LLP accounts, and came across UITF 40 for the first time. Can someone explain to me what this is? All my manager said is "it's basically another capital account".
Thanks
Gem
0
Comments
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A capital account?? Not sure what your manager means to be honest.
UITF 40 is also known as 'Application Note G to FRS 5'. It concerns 'Revenue Recognition' and when an entity should recognise revenue in its financial statements. It was issued primarily to outline the circumstances when an entity, who has work-in-progress, should recognise WiP in turnover as opposed to WiP by looking at when the entity has a 'right to receive consideration' as opposed to when an entity invoices for the goods or services - though it does cover a lot more detail than just WiP. The same principles are covered in FRSSE contained in section 4.
You can see AN G here
Regards
Steve0 -
Thanks Steve.
If it's all to do with revenue recognition by the company, why do all of the members in this particular set of accounts have a UITF 40 account in the balance sheet showing as amounts due to members? :confused1:
And not along ago I prepared a personal tax return for an ex-partner of the firm of accountants I work at and they had UITF 40 income on their tax return?0 -
Prior to UITF 40 being issued, amounts of work in progress would simply be recognised in the financial statements as :
CR WiP - P&L account
DR Wip - Balance sheet
UITF 40 principles state that an entity should recognise in its turnover any amounts of work in progress which it has not yet invoiced to the customer, but for which it is entitled to receive payment for, whether in part or in full. For example a firm of accountants would not expect to be entitled to receive payment for a half completed tax return, however if all the work has been completed for the client, but at the year end it had not been invoiced, then the fee should be recognised in turnover according to UITF 40 principles. So instead of the journal above you would:
CR turnover
DR debtors (amounts recoverable on contract) (I think this may the UITF 40 account in your 'amounts due to members' in the LLP financial statements).
When the fee note is then raised (ie CR sales DR debtors control) you would adjust the figures in the current year so as to avoid 'double counting' the sale by:
DR sales
CR debtors (amounts recoverable on contract).
Regards
Steve0 -
I may be barking up the wrong tree here but..
The balance you see for each partner may be to do with the spreading provisions and each amount being released as it is charged to tax.0 -
Uitf 40
CCAB issued a guidance on the subject called
"Guidance on the application of UITF 40 "Revenue recognicition and service contracts" some time ago I think 2006.
As it suggests it's applicable to service industries and it is to do with uninvoiced charges (call it WIP in service industries) for the work done.
AAT and ATT issued a joint guidance as well. I am sure this can be found on the ATT website.
On another note the loging onto the discussion form seems to contain some frustrating features.
I wonder if anyone else has come across the same.0 -
Uitf
Sorry,
Also Tax Guide 5/06 of ICAEW gives guidance notes on the tax aspects of UITF Abstract 40
Hope they're useful to some out there.0 -
deanshepherd wrote: ยปI may be barking up the wrong tree here but..
The balance you see for each partner may be to do with the spreading provisions and each amount being released as it is charged to tax.
This is ringing a bell for me, can you expand?
Thanks for the replies everyone, I'll do my research!
Gem0 -
UITF 40 is actually an application note to FRS 5.
Beverly.0 -
g0
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There's an echo in here!!0
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