UITF issues two accounting abstracts
The Urgent Issues Task Force has issued abstracts resolving conflicts over the accounting treatment of lease incentives and the cost of website development.
Abstract 28 has resolved the way in which both lessors and lessees account for any incentives given by the lessor to the lessee.
The abstract, which was supported by most of the committee, took the view that the monthly rent, minus the incentive, should be recognised as the monthly charge over the period of the lease, or where appropriate, deducted of the next rent review.
This new abstract replaced Abstract 12, extending the accounting requirement to the lessor and will become effective from 22 September 2001.
Abstract 29 relates to the costs of developing a website, such as a company website, and directs the company to capitalise and amortise costs, other than planning costs, provided that certain criteria are met.
Under particular circumstances, a company is restricted from including the cost of creating the website on the income statement and balance sheet, if for example, they do not create ‘enduring assets’.
Abstract 29 comes into effect from the 23 March 2001.
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