Website on the balance sheet

[Minuteman Press]

Dear all,

Can a webiste appear on the balance sheet (intangible asset?)?

Does a standard exist or agreed protocol for valuing the website?
I can define age, number of pages, hits, unique visits, enquiries, sales volume, sales value attributable to the website.

If it is possible, how have others determined a value?

Thanks

Peter

 

[An Oasis]

Ditto.

Was having a similar conversation last night, no one knew.

 

[Rolo Tomasi]

For your own website to be included on the balance sheet it has to be able to directly generate income - a few pages advertising your business would not be sufficient but an e-commerce site probably would.

You cannot determine the amount to include, only the costs of the website are included. The cost of the website would need to be categorised with any planning costs incurred prior to development and any costs to maintain the site after it has been developed always charged to the P&L.

That leaves the costs of developing a website which would usually be included on the balance sheet as a tangible fixed asset.

 

[Minuteman Press]

So SEO, Adwords, design spend ongoing would increase the balance sheet value of the tangible fixed asset?

Also...

I am surprised that the results of a thorough externally verifiable audit of results leading to revenue do not count unless transacted on the site. Can that be correct? Jaguar cars, Coca-cola as examples?

Or is it simply that development and maintenance only are allowed?

It's an interesting one!

Thanks An Oasis / Rolo Tomasi for feedback.

 

[Rolo Tomasi]

So SEO, Adwords, design spend ongoing would increase the balance sheet value of the tangible fixed asset?

SEO and adwords would be revenue expenses and so allocated to the P&L. The initial design of a website is likely to be an asset for ongoing maintenance is also a P&L item.

Its pretty standard in accounting that goodwill or other intangible assets generated by a company are not included on its balance sheet.

 

[PHAWKS]

UITF 29 deals with this. Google, "UITF 29 FRC" as I cannot post links yet.

Essentially a website can be capitalised if it is used for direct sale.

Adwords etc are considered marketing expenditure.

 

[Zeks 1999]

The link for the previous post.
http://www.frc.org.uk/asb/uitf/pub0225.html

If it's any help, I recently went through an audit for a £50m turnover company, with one of the "big four" accountants.

We had a new website devloped in the financial year, and all the development costs (including purchase of the domain, which was a significant cost due to the fact it was owned by someone else) were capitalised. We did not sell directly through the site.

Any advertising, SEO etc were written off to P&L, and we did not include any of our company time spent in the planning phase (which again was significant, but.......).

It was classed as a tangible IT asset, which will govern the future treatment.