Where an expense spans two accounting periods the decision maker should only allow the portion of the expense relating to the assessment period.
The assessment period is the period of the profit and loss
account 1.1.98 to 31.12.98.
1) Rates for workshop paid on 19.10.97 for 6 months 1.10.97
to 31.3.98 were £600. Only that part of the payment covering
the 3 months 1.1.98 to 31.3.98 (£300) relates to the
assessment period.
2) Rates for the year from 1.4.98 were £1800. Payment of
£900 for 6 months 1.4.98 to 30.9.98 was made on 5.5.98. The
whole of the payment relates to the assessment period.
3) Rates paid on 9.10.98 for 6 months 1.10.98 to 31.3.99 were
£900. The part of the payment covering 1.10.98 to 31.12.98
(£450) relates to the assessment period.
The total paid out for rates during the assessment period was
£900+ £900 (2. +3.) = £1800. But the amount relevant
to the assessment period, and allowable as an expense, was
£300+ £900 + £450 (1. +2. +3.) = £1650.
