Page 23 - CIMA MCS Workbook February 2019 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

cosmetic dental work, there is no guarantee that they will actually do so. Equally, there is no
guarantee that an employee will remain with Crowncare after they have received training: they
could resign and apply the benefits of their training for their new employer.

Cost of subscriptions and business registration
The professional subscriptions are an annual payment. Therefore, they would be spread over the
twelve‐month period to which they relate. Most professional bodies have an annual subscription
based upon the calendar year. If subscriptions are paid e.g. in December for the following
calendar year, Crowncare should recognise a prepayment in its financial statements for the
amount paid, with the expense written off in the following year. This will match the expense to
the accounting period to which it relates.

In the case of the business registration fee, this payment relates to a three‐year period.
Consequently, the cost (if paid in advance like subscriptions) should be spread over the three‐year
period to which it relates, with a prepayment carried forward at the end of the first and second
year of the registration period.

Financial Manager

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