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PR Newswire
25-01-2016, 08:25 PM
Boon wrote
"The other possibility that “Advances” could have “contributed” towards increase in “VAT receivables”, before being expensed, would be if Sino had made 55m PLUS 9 m (= 55 x 17%) of VAT to the suppliers of PPE – with 55 m parked under “Advances” and 9 m under “VAT receivables”. But would this be in line with the accounting principles ? Besides, we are talking about prepayment of 64 m and not 55 m."
The underlined statement is correct only if the asset to be constructed was building structure, in which event the RMB 9m VAT could not be deducted from output VAT and hence did not qualify as "VAT receivable".
There is no information that this was the case.
On the other hand, if RMB 55m was for plant and machinery and RMB 9m the associated VAT, is it incorrect to account for them separately?
"The other possibility that “Advances” could have “contributed” towards increase in “VAT receivables”, before being expensed, would be if Sino had made 55m PLUS 9 m (= 55 x 17%) of VAT to the suppliers of PPE – with 55 m parked under “Advances” and 9 m under “VAT receivables”. But would this be in line with the accounting principles ? Besides, we are talking about prepayment of 64 m and not 55 m."
The underlined statement is correct only if the asset to be constructed was building structure, in which event the RMB 9m VAT could not be deducted from output VAT and hence did not qualify as "VAT receivable".
There is no information that this was the case.
On the other hand, if RMB 55m was for plant and machinery and RMB 9m the associated VAT, is it incorrect to account for them separately?