Stock and cost of sales question

Hi,

After receiving quick and perfect help on my last question, would appreciate an answer to this one.

I have a limited company, and amongst other things, use it to regularly buy websites and flip them on for a profit. If the websites don't sell (I would say about 50% do), they generate revenue but will generally still be for sale if anyone enquires.

The websites which have been bought/sold in a given financial period is simple enough as I assume they will have just been classed as stock and therefore a cost of sale (given that this is one of the main sources of income)?

However... how are the websites which haven't sold treated in the same financial period? Do the purchases still count as a deductible expense on the profit and loss account, or are the only expenses the websites which have been bought and sold?

If they aren't treated as expenses for the same period they are unsold for, I guess they go down as assets? And if this is the case, how do I then account for them as an expense when they do sell?

Example:
Accounting period runs from April 1st 2011 - March 31st 2012.
Websites A, B, C and D all bought for £2,000 each in this period.
In the same period, websites A and B sell for £5,000 each.
At the end of this period, websites C and D remain unsold and carry over to the next year.

Would the allowable expenses for 11/12 be £4,000 (making a profit of £6,000) or £8,000 (making a profit of £2,000)? Obviously this is going to have an effect on corporation tax, which depending on the answer gives a difference of £800).

Click to expand...

I've probably missed some kind of detail there... so please let me know if I have! :|

Using Kashflow by the way.

Cheers