Missing sheep...

Lucy_M

Hi, I have a client who is a self employed farm labourer. In April 2013 he decided, with his partner, to buy some sheep and breed them, use the wool etc. as a side line, 10 months later they have separated and she has taken the sheep. Can I still claim for the purchase costs and expenses? She has not paid anything for them and he was the sole wage earner. As they would have been treated as an asset how do I account for them 'disappearing'?
Many thanks,
Lucy

Lucy_M

So, as I need to get these accounts finished asap, I have expensed all spending except the sheep, which I have capitalised. I've claimed the expenses and offset the loss against his other income for this year and I will write off the sheep in next years accounts. (Apparently, although they separated 10 months later, she did not take the sheep straight away...)

If anyone can see anything wrong with this solution please say?!

burg

You could add them and then remove them next year. You may also need to look at and consider the herd basis.

Lucy_M

Thank you burg, I have looked at the herd basis, I think, as there was no clear intention to keep these as a herd, as some may have been sold on, then I will keep them as stock to be written off in next years accounts.