Hi, I'm doing my UK Companies House limited company abbreviated accounts (on-line submission) and I use Xero online bookkeeping.
I have a question about how to treat an invoice that relates to a supplier contract that we are currently re-negotiating which should also cancel out a historical liability on that contract.
I have partially paid the invoice and expect the remainder to be credited as part of the re-negotiated contract.
What options do I have for how I show this in Xero and how should I show it in my Abbreviated Accounts ?
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Hi, thanks for the rapid response. I can confirm that the contract was still under negotiation at the balance sheet date.
If I recognise and the show the full amount of the liability, it will show the company in an unhealthy financial situation, which could jeopardise future business prospects.
So I would rather, if it is allowable, show a proportion of the outstanding liability as a realistic estimate of what I expect the final outcome to be. Is this allowable under accounting rules in any way and if so how would I represent it ?
Hi, Thanks fro the further detail. Before asking the original question, I had applied a credit to the outstanding invoice - is that what you mean by 'Make a journal entry for a realistic estimate and your entries would beCredit - appropriate expense account within profit and loss account with the credit due' ?
However, the date of the credit note was for this financial year, rather than the one I am reporting on, so presumably I need to give it an effective date as of the year I was reporting on, plus the same for the debit ?
For the debit, is that a manual journal entry aginst the same account or is there a 'business transaction' I could do instead ?
Hi, I need to get these accounts filed with Companies House today.... so if you are able to reply sooner rather than later that would be much appreciated!