Invoiced for future expenses

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Satoshi
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Joined: 05 Jan 2023, 13:57

Invoiced for future expenses

Post by Satoshi »

Hi all,

Just to clarify to my understanding under IFRS standard for prepayment. Prepayment is expenses that has been paid but has not incurred during the year. My company has been invoiced on 1st December 2022 for future expenses in year 2023 by a supplier.

Should I book this in FY2022 book? If I don't, then it won't tally to the supplier' Statement of Account.
JRSB
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Re: Invoiced for future expenses

Post by JRSB »

There isn't really a standard for prepayments.

What do you mean by 'future expenses'.? You've paid the invoice already, great, so are you saying the services you paid for are not yet rendered? So you've paid a deposit or 'on account' payment. Do you get it back if those services never get provided?
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Marek Muc
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Re: Invoiced for future expenses

Post by Marek Muc »

in general, prepayments are intangible assets in the scope of IAS 38, they are rights to receive goods or services in the future
https://ifrscommunity.com/knowledge-bas ... d-expenses

if the supplier had a contractual right to issue an invoice in Dec 2022 then you have a liability that needs to be recognised too (even if the services will be provided in 2023)
Satoshi
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Joined: 05 Jan 2023, 13:57

Re: Invoiced for future expenses

Post by Satoshi »

JRSB wrote: 05 Jan 2023, 15:29 There isn't really a standard for prepayments.

What do you mean by 'future expenses'.? You've paid the invoice already, great, so are you saying the services you paid for are not yet rendered? So you've paid a deposit or 'on account' payment. Do you get it back if those services never get provided?
Sorry for the confusion. It's not paid yet, the invoice is provided early.
Marek Muc wrote: 05 Jan 2023, 15:40 in general, prepayments are intangible assets in the scope of IAS 38, they are rights to receive goods or services in the future
https://ifrscommunity.com/knowledge-bas ... d-expenses

if the supplier had a contractual right to issue an invoice in Dec 2022 then you have a liability that needs to be recognised too (even if the services will be provided in 2023)
So it's to be booked regardless even it is not paid yet?
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Marek Muc
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Re: Invoiced for future expenses

Post by Marek Muc »

It doesn't matter whether it was paid or not.

Did the supplier have right to invoice you in December? Was it in line with contractual terms?
Satoshi
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Re: Invoiced for future expenses

Post by Satoshi »

Yes, they actually have.

Thank you.
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