Significant accounting policies
The accounts have been prepared under the historical cost convention and in accordance with FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland (as applied to small entities by Section 1A of the standard)
Going concern basis
The financial statements for Spring View Developments Ltd have been prepared on a going concern basis, as the company is currently engaged in developing property for resale. This assessment is supported by the companys stock of work in progress valued at £814,561. While the development is primarily funded through creditors totaling £812,413 and directors' current accounts of £2,048, the directors have a reasonable expectation that the eventual sale of the property will provide sufficient liquidity to meet all liabilities as they fall due.
Turnover
Turnover is measured at the fair value of the consideration received or receivable net of VAT and trade discounts. The sale of property revenue is recognised at the point of sale, which is usually where the customer has taken delivery of the goods, the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns and trade discounts.
Taxation
Taxation represents the sum of tax currently payable and deferred tax. Tax is recognised in the statement of income, except to the extent that it relates to items recognised in other comprehensive income or directly in capital and reserves.
The company’s liability for current tax is calculated using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Current and deferred tax assets and liabilities are not discounted
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the reporting date.
Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Current and deferred tax assets and liabilities are not discounted.
Stocks
Stocks relate to the property development project at Spring View Farm, Shire Lane, Chalfont St Peter, SL9 0QX. The balance of £814,561 comprises land acquisition, direct costs, and £42,942 of capitalised interest on loans used to fund the project. Stocks are valued at the lower of cost and net realisable value.
Capitalisation of borrowing costs
Borrowing costs that are directly attributable to the acquisition and construction of the property development at Spring View Farm are capitalised as part of the cost of that asset. Capitalisation continues until the property is substantially ready for its intended use or sale. This includes accrued interest on shareholder loans directly funding the development. All other borrowing costs are recognised in the Profit and Loss account as incurred.
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.