[Question] Income Statement or Balance Sheet

[OdetteBK]

Hi!

I am busy processing auditor journals and see that I have to create some new GL accounts..
I have never worked with Fair Value & Fair Value Adjustments before. So my question is:

Are these Income Statement or Balance Sheet items and how would I classify them? (ie. Income Statement - Other Income or Expenses / Balance Sheet - Fixed Assets or Current Assets)

Thank you

[Marq]

Could be both, but usually balance sheet adjustments assets/stocks and non distributable reserves - but if you are asking this question then it means you need a serious accounting lesson which I dont think the forum here would be the right place to teach you.

I would advise waiting for the auditors to see what it is they they require adjusting if you are not sure.

[CLIVE-TRIANGLE]

Fair value adjustments affect both balance sheet and income statement.

I would advise that with regards to the balance sheet, you create an account that is a sub-account of the assets being being adjusted.

The debit goes to an expense account (whether you classify it as a normal expense or other expense is immaterial). No need to create separate accounts for each adjustment, just name it Fair value adjustment or IFRS adjustment account.

[OdetteBK]

Thank you Clive. I really appreciate your advice & assistance.

@ Marq - 1. "I would advise waiting for the auditors to see what it is they they require adjusting if you are not sure." - I apologise for not being clear in my post about the fact that I was working with yearend adjusting journals provided to me by the auditors with the instruction to process same. 2. I apologise that my post came across as looking for a serious accounting lesson, after viewing many other posts I was under the impression this was a forum to share information & knowledge. "I have never worked with Fair Value & Fair Value Adjustments before" - 20 years of Bookkeeping I have never had to work with Fair Value before. I am currently studying Technical Financial Accounting through the ICB, maybe Fair Value will still be coming up in my syllabus...