Please need advise IAS 16 paragraph 37 vs 7 and 9

[ibin]

<b>Please assist me on this accounting problem in relation to IAS 16</b>.
We have received a query from our Auditors that we expense some of the assets, which we term them as “minor assets”, we do have a policy of expensing some minor assets the policy says “Expenditures on furniture, office equipment, workshop tools and other minor assets are written off during the year of acquisition. However, they are recorded in memoranda registers.

<i>Auditor’s observation</i>
The company has been expensing major classes of Property Plant and Equipment such as Furniture and fixtures, computers, printers, etc contrary to the requirement of paragraph 37 of IAS 16.

<i>Our views</i>
We believe that we still in compliance with IAS 16 as the standard gives room for such a policy through paragraph 7 and 9

<u>ADDITIONAL INFORMATION TO MEMBERS OF THE FORUM</u>

Assets of furniture, office equipment, workshop tools and other minor assets are termed as minor when its individual item cost is less or equal to USD 10,000.

During the year under review 2008/2009 the Company incurred USD 817,957 to procure minor assets and the cost has been expensed”.

Net Carrying Amount (Net Book Value)as at 30 june 2009 of our Property Plant and Equipment is USD 225,903,294.

Total assets USD 326,774,051

Total income USD 153,893,637
Total expenditure USD 108,970,398
Pre Tax Profit USD 44,923,239