Mortgage Rate Rises

[Kanpai]

?

Most people do, but they are not illogical people, and understand there is not some fantasy better job for all of them because if there were, society would cease to function.

Sounds like excuses, most people just want to complain about being poor or not being able to live a better lifestyle but don't want to go above and beyond what is needed to match their expectations.

We are not living in a third world country where there are limited opportunities to start earning extra income or to upskill yourself. You've got access to all the tools and resources to start helping yourself, but like I said for most people they have lazy work ethic and complain about not getting the results they don't get from the work they don't put in.

You don't need a fantasy job with higher pay, getting a higher paying job is one way of increasing your income, not the only one. Many people have ventured out, opening up a side business, working two jobs, learning a new skillset to achieve this etc.

But it brings me back to your point about society ceasing to function if everyone was driven and not lazy, you're absolutely right. Most people only think about the instant gratification and short term thinking let alone think about fixing the underlying problem. It's very difficult though when everything around you is designed to keep you being a slave to society, let alone the normalization that comes from it because everyone is doing it so you don't think it's a real problem.

Anyways I digress.

 

[Mercenary Keyboard Warrior]

But that's not false accounting. They're accurately illustrating what was done. It's the equivalent to you deciding to buy a car outright vs on finance when you have the money in your bank account. Just because its there, you don't have to spend it but you may choose to.

In the same way I might decide this year to conduct a more in depth audit of my assets which ascertains that they're not worth what we previously thought.

Its false accounting for a professional accountant not to follow the rules. Knowingly not following international standards for example.

Fixed asset audits are part of standard controls. Typically standard processes (this is company process for eg SOX compliance) would be say a three year rolling audit. So you audit some assets each year and every asset every three years.

Sorry forgot the car comment, thats whats known as off balance sheet finance. Something that was tidied up and clamped down upon some time ago.

Understanding Off-Balance Sheet (OBS) Financing

Off-balance sheet financing means a company does not include a liability on its balance sheet. It impacts a company’s level of debt and liability.

www.investopedia.com

 

[Dis86]

Its false accounting for a professional accountant not to follow the rules. Knowingly not following international standards for example.

Fixed asset audits are part of standard controls. Typically standard processes (this is company process for eg SOX compliance) would be say a three year rolling audit. So you audit some assets each year and every asset every three years.

Sorry forgot the car comment, thats whats known as off balance sheet finance. Something that was tidied up and clamped down upon some time ago.

Understanding Off-Balance Sheet (OBS) Financing

Off-balance sheet financing means a company does not include a liability on its balance sheet. It impacts a company’s level of debt and liability.

www.investopedia.com

Your own link says OBS are allowed under accounting standards?

 

[Mercenary Keyboard Warrior]

Your own link says OBS are allowed under accounting standards?

Indeed and they are included in the notes to the accounts. Thats the main part.
Its the section any person who really understands accounts will jump to, when you read the notes to the accounts you very quickly get an idea what the company is upto and doing that simply looking at profit numbers will not.

They used to be invisible basically.

 

[Dis86]

Indeed and they are included in the notes to the accounts. Thats the main part.
Its the section any person who really understands accounts will jump to, when you read the notes to the accounts you very quickly get an idea what the company is upto and doing that simply looking at profit numbers will not.

They used to be invisible basically.

Right so if they're allowed, how does that mean they can't have been used, or not, in this situation?

 

[Mercenary Keyboard Warrior]

Right so if they're allowed, how does that mean they can't have been used, or not, in this situation?

Neither, you brought up the cash thing. I was just highlighting it was a strategy some used to try to hide things previously, and its now not a valid option unless you want to mis state your accounts.

Its perfectly valid to lease an asset and account for the costs in your books.
And it is still somewhat allows a misleading picture of a business, as the article I linked says. If you ever do M&A one of the areas that a lot of work will be undertaken in is proving no OBS has been "forgotten". Along with asset validation and valuation etc

 

[dowie]

@Jono8 you're laugh reacting but so far this morning you've confused adjusted profits with operating profits and now you're confusing someone's arguments re: increasing productivity with statements from the BOE re: people asking for pay rises.

 

[Jono8]

@Jono8 you're laugh reacting but so far this morning you've confused adjusted profits with operating profits and now you're confusing someone's arguments re: increasing productivity with statements from the BOE re: people asking for pay rises.

I've done neither.

 

[BUDFORCE]

I've done neither.

 

[gazref]

How is taxing companies more going to help this exactly?

Why do people need bigger pay rises?

 

[jonneymendoza]

Why do people need bigger pay rises?

They make a killing and should be taxed accordingly.
Most of them pay little for tax

 

[DJMK4]

What was it bank of England were saying ? They would not lower the base rate until general prices start coming down ? They are not going to shift on not raising.the base rate until this happens

Well today today I visited Asda who have redone all their shelves again, moved stuff around, raised prices

Fuel is on the rise aswel. .

I'm not looking for a remortgage as Im.done with the lowest rate I could get at the time 3.95% for a 5 year fix .

The volatility isn't going away. Prices are still going to rise.


Shafting the UK one sector at a time..

 

[One More Solo]

No, the point was that you can include significant infrastructure/business changes as a cost to 'reduce' profit. You're incredibly naive if you don't think these decisions are made intentionally and in certain years to have desired effects. If tesco chose to then they can write the cost of a new store off in one year, not over say twenty.
They will do what they want, when they want (generally within the law) to make their figures look favourable to them either to appease shareholders or to present a media friendly point of view.

I can scarcely believe I’m talking about accounting standards on my day off but I did want to add that MKW is broadly correct in what he is saying (unsurprising given it appears to relate to his job).

The sort of things you have proposed in this thread show little to no grasp of how accounting works e.g. how/when an asset is paid for will have no bearing on how it is accounted for, companies cannot arbitrarily write down their assets in value, companies cannot choose to expense fixed assets that should be capitalised, companies cannot hide financing off balance sheet etc.

It’s one of those painful arguments of someone coming from a position of knowledge arguing with a layperson who refuses to accept their limitations.

 

[Dis86]

I can scarcely believe I’m talking about accounting standards on my day off but I did want to add that MKW is broadly correct in what he is saying (unsurprising given it appears to relate to his job).

The sort of things you have proposed in this thread show little to no grasp of how accounting works e.g. how/when an asset is paid for will have no bearing on how it is accounted for, companies cannot arbitrarily write down their assets in value, companies cannot choose to expense fixed assets that should be capitalised, companies cannot hide financing off balance sheet etc.

It’s one of those painful arguments of someone coming from a position of knowledge arguing with a layperson who refuses to accept their limitations.

Literally not talking about hiding anything. Not sure where you've pulled that from.

So, perhaps you can explain why they can't choose to account for the costs of opening new stores, refurbs, etc in a single year, or audit and appropriately adjust downwards the values of their current assets?

I'll give examples. I have a fleet of vans, I normally assume that they'll last 15 years so account for their cost over that period. However I audit them and find that they're rotten and actually after five years will be useless needing replacement. Would that therefore not be accounted for in the fifth year with each of those vans that i'd assumed were worth say...£20k each actually only being worth £3k or scrap value.

 

[One More Solo]

Literally not talking about hiding anything. Not sure where you've pulled that from.

So, perhaps you can explain why they can't choose to account for the costs of opening new stores, refurbs, etc in a single year, or audit and appropriately adjust downwards the values of their current assets?

I'll give examples. I have a fleet of vans, I normally assume that they'll last 15 years so account for their cost over that period. However I audit them and find that they're rotten and actually after five years will be useless needing replacement. Would that therefore not be accounted for in the fifth year with each of those vans that i'd assumed were worth say...£20k each actually only being worth £3k or scrap value.

Because the stores “are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one period” they meet the definition of property, plant and equipment. Accordingly they have to be capitalised and depreciated over their useful life. There is no choice over this. Costs attributable to the stores have to be capitalised into the cost and depreciated too.

They have to review their assets for indicators of impairment each reporting date. This resulted in a write down of some of their assets. The residual value continues to be depreciated. Whether or not an asset should be impaired is not a finger in the air calculation and requires supporting evidence.

 

[Sythe79]

I can scarcely believe I’m talking about accounting standards on my day off but I did want to add that MKW is broadly correct in what he is saying (unsurprising given it appears to relate to his job).

The sort of things you have proposed in this thread show little to no grasp of how accounting works e.g. how/when an asset is paid for will have no bearing on how it is accounted for, companies cannot arbitrarily write down their assets in value, companies cannot choose to expense fixed assets that should be capitalised, companies cannot hide financing off balance sheet etc.

It’s one of those painful arguments of someone coming from a position of knowledge arguing with a layperson who refuses to accept their limitations.

No, but you can choose how you amortise fixtures and fittings, for example, all the things that that makes a Tesco store a Tesco store are pretty much worthless. what's to stop them doing what football clubs do with players but in reverse to cut taxes ?

 

[sither]

this country is to pot what is it going to take to fix it.

 

[Dis86]

Because the stores “are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one period” they meet the definition of property, plant and equipment. Accordingly they have to be capitalised and depreciated over their useful life. There is no choice over this. Costs attributable to the stores have to be capitalised into the cost and depreciated too.

They have to review their assets for indicators of impairment each reporting date. This resulted in a write down of some of their assets. The residual value continues to be depreciated. Whether or not an asset should be impaired is not a finger in the air calculation and requires supporting evidence.

Such as a drop in property values for example?

I'm curious, what do accountants know about engineering? Surely they're relying on the input of someone else?

 

[Mercenary Keyboard Warrior]

No, but you can choose how you amortise fixtures and fittings, for example, all the things that that makes a Tesco store a Tesco store are pretty much worthless. what's to stop them doing what football clubs do with players but in reverse to cut taxes ?

Not really. The land and buildings would be probably 90% of the value of a store.
The fixtures and fittings would be 1) useable in another store and 2) would still be something that was in use for more than one year. Store refits look like they kind of happen in a 5-10 year window from my experience.

Such as a drop in property values for example?

I'm curious, what do accountants know about engineering? Surely they're relying on the input of someone else?

If a property dropped below its current net book value (going to be pretty rare) then you would take some additional depreciation to drop it to market value.
The problem is normally the opposite, the assets significantly undervalued vs market value when net book value is based on depreciated original cost.

Oh your van example, 15 would seem excessive, and if you were really doing so then you would likely consider double depreciation as it would more closely match the real world value of something like a van

Double-Declining Balance (DDB) Depreciation Method: Definition and Formula

The double-declining balance (DDB) depreciation method is an accelerated method that multiplies an asset's value by a depreciation rate.

www.investopedia.com

In regards engineering. It would very much depend. A practice accountant would likely know next to nothing. A management accountant who worked in or around engineering would likely know a reasonable amount.
I spent my first 6 years in work at a metallurgy manufacturer for example, we had an engineering department of around 40 people, from CAD to destruction testing etc, as I looked after the asset register and capitalisation of new assets I knew quite a bit about the companies assets.
But as said before, most companies have a policy if they are of any size, and as such unless there would be a specific reason to deviate they would just apply the policy.
Most accountants can tell a motor vehicle, from land, to a freehold or leasehold building for example

 

[Dis86]

Not really. The land and buildings would be probably 90% of the value of a store.
The fixtures and fittings would be 1) useable in another store and 2) would still be something that was in use for more than one year. Store refits look like they kind of happen in a 5-10 year window from my experience.



If a property dropped below its current net book value (going to be pretty rare) then you would take some additional depreciation to drop it to market value.
The problem is normally the opposite, the assets significantly undervalued vs market value when net book value is based on depreciated original cost.

Oh your van example, 15 would seem excessive, and if you were really doing so then you would likely consider double depreciation as it would more closely match the real world value of something like a van

Double-Declining Balance (DDB) Depreciation Method: Definition and Formula

The double-declining balance (DDB) depreciation method is an accelerated method that multiplies an asset's value by a depreciation rate.

www.investopedia.com

In regards engineering. It would very much depend. A practice accountant would likely know next to nothing. A management accountant who worked in or around engineering would likely know a reasonable amount.
I spent my first 6 years in work at a metallurgy manufacturer for example, we had an engineering department of around 40 people, from CAD to destruction testing etc, as I looked after the asset register and capitalisation of new assets I knew quite a bit about the companies assets.
But as said before, most companies have a policy if they are of any size, and as such unless there would be a specific reason to deviate they would just apply the policy.
Most accountants can tell a motor vehicle, from land, to a freehold or leasehold building for example

Yes, but what they would struggle, in a lot of cases, to tell is the difference between surface, superficial and severe corrosion. This is actually a genuine issue we had with 20 vans purchased at the same time. All developed serious chassis corrosion issues far ahead of when they should have resulting in them being written off as the cost to repair far outweighed remaining value.

Also on the fixtures and fittings thing. It's often far more expensive to remove, store, transport and install than it is to buy new. All too often things can't really be removed once they've been installed without them being too badly damaged to reuse.