In its statement of accounting policies, Oxfam describes its policies concerning vehicles and equipment depreciation and stocks
Question:
In its statement of accounting policies, Oxfam describes its policies concerning vehicles and equipment depreciation and stocks (inventories) as follows. Vehicles and equipment used in programmes overseas are considered to have a useful economic life of one year or less. They are not capitalised but are charged in full to charitable expenditure when purchased. Unsold donated items are not included in closing stock since their cost is nil and their value is uncertain until sold. Required
(a) Explain what is meant by the statement about vehicles and equipment and why Oxfam may have decided not to capitalise these items.
(b) Explain why Oxfam have placed no value on the stock (inventory) of unsold donated items in their shops.
Step by Step Answer:
Accounting In A Nutshell Accounting For The Non-specialist
ISBN: 9780750687386
3rd Edition
Authors: Walker, Janet