Question

Event 1: Purchased additional fixtures and fittings for $15000 paying 50% cash and the other 50% still owing to the supplier.

Why does 50% of PPE still owing to supplier fall under other current liabilities, not trade payables?

Answer 1

Trade payable indicates the amount billed to the suppliers for inventory purchased on credit. Trade payable arise from the credit purchases of inventory.

In this case, the purchase of fixtures and fittings is part of the property, plant, and equipment (PPE). The purchase of PPE on credit is not considered as credit purchases. Therefore, it is reported under the other current liabilities instead of trade payable.

In simple words, the trade payable name suggests the amount of payable for trade transactions. Thus, the purchase of fixtures and fittings should not report under the trade payable.

What item company purchased on credit? Property, Plant, and Equipment Inventory Reported under Other current liabilities Reported under Trade payable

Trade payable word is use in the IFRS Balance Sheet.