Abbreviated Company Accounts - DREAM COTTAGES LIMITED

1Accounting Policies

Basis of measurement and preparation of accounts
The full financial statements, from which these abbreviated accounts have been extracted, have been prepared under the historical cost convention as modified by the revaluation of Land and buildings and in accordance with the Financial Reporting Standard for Smaller Entities (effective January 2015).

Turnover policy
Turnover comprises revenue recognised by the company in respect of goods and services supplied during the year, exclusive of Value Added Tax and trade discounts. For services provided in which the company acts as an agent only the commission element of goods and services supplied is recognised as turnover.

Tangible assets depreciation policy
Tangible fixed assets are stated at cost or valuation less depreciation. Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual value, over their expected useful lives on the following bases:
Motor vehicles - straight line over 5 years
Office equipment - 20% average reducing balance
Other fixed assets - 33% reducing balance

Intangible assets amortisation policy
Goodwill is the difference between amounts paid on the acquisition of a business and the fair value of the identifiable assets and liabilities. It is amortised to the Profit and loss account over its estimated economic life.
Goodwill - 25%

Other accounting policies
CASH FLOW
The financial statements do not include a Cash flow statement because the company, as a small reporting entity, is exempt from the requirement to prepare such a statement under the Financial Reporting Standard for Smaller Entities (effective January 2015).

INVESTMENT PROPERTIES
Investment properties are included in the Balance sheet at their open market value in accordance with the Financial Reporting Standard for Smaller Entities (effective January 2015) and are not depreciated. This treatment is contrary to the Companies Act 2006 which states that fixed assets should be depreciated but is, in the opinion of the directors, necessary in order to give a true and fair view of the financial position of the company.

OPERATING LEASES
Rentals under operating leases are charged to the Profit and loss account on a straight line basis over the lease term.

DEFERRED TAXATION
Full provision is made for deferred tax assets and liabilities arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation.
Deferred tax is not provided on timing differences arising from the revaluation of fixed assets in the financial statements.
A net deferred tax asset is recognised only if it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse.
Deferred tax assets and liabilities are not discounted.

4Fixed assets Investments
INVESTMENT PROPERTY

VALUATION
At 1 November 2015 £2,325,000
Additions at cost £160,256
Surplus/(deficit) on revaluation £339,744
At 31 October 2016 £2,825,000

The 2016 valuations were made by the directors, on an open market value for existing use basis.