Draft UITF Absrtacts

On 19 October the ASB published for comment draft Abstracts by its Urgent Issues Task Force (UITF) on two topics—Website development costs and operating lease incentives.

Website development costs

Many entities are spending significant sums on developing Websites, some of which are intended to be integral to their business activities. The UITF decided that the costs of the design and content of a Website should be capitalised only where they lead to the creation of an enduring asset and to the extent that it can be demonstrated that the entity will receive economic benefits at least as great as the expenditure. In other cases the costs should be charged to the profit and loss account as incurred.

Operating lease incentives

The second draft Abstract deals with accounting for lease incentives from the perspective of both the lessee and the lessor. The UITF agreed that the rental, net of any incentive, should be recognised as rental expense or income over the period of the lease or, as appropriate, the period to the next rent review.

The proposed Abstract would replace Abstract 12 ‘Lessee accounting for reverse premiums and similar incentives’, which, as its title implies, deals only with accounting by the lessee. No major changes are proposed to the requirements of Abstract 12, the main purpose of this proposal being to extend the requirements to lessors, who are also covered by the equivalent international requirements.

The two draft Abstracts are set out in UITF Information Sheet 42. Comments on either of the drafts should be addressed to Andrew Lennard, UITF Technical Director, and sent to arrive by 27 November. Comments may be sent by email to uitf@asb.org.uk.

Barter transactions for advertising

A draft Abstract on this subject was published on 13 July. The UITF is considering the responses received, and it is expected that a final Abstract will be issued in due course.

UITF Abstracts and Information Sheets are available on the ASB’s Website and from Holborn Hall