Cost of Sales Technology company

[tljenkin]

Hi All,

I'm new here so please bear with me. I have a few questions on cost of sales in a Tech company.

A platform is being built which the business will customise at a later date for the client but use as a scale-able base for future customers.
The client has paid upfront for the product and this is the only client for our company.
A few business units have been created for accounting purposes, two of which are the client BU and the Tech BU. The revenue has been posted to the client BU
The Tech team is busy designing and building the platform
The Client team is working with the client on delivering the product to the clients specifications and project timeline

Questions:
1) Should there be any cost of sales in Tech at this point in time or should all sit under the client BU
2) Should salaries go under CoS? Most of the costs are staff costs but from consultant and 3rd party coders. The permanent salary costs are for project managers working in the client BU
3) Is there any UK gaap or FRS guidance on this you might want to share?
4) What should be charged to Direct Wages (assuming this is cost of sale)?

Thank you

Tee

[NotAllThere]

I've allowed this through, but I think you'd be better off asking on a specialised accountancy board. Or asking your accountant.

[RonBW]

2) Should salaries go under CoS? Most of the costs are staff costs but from consultant and 3rd party coders. The permanent salary costs are for project managers working in the client BU

From what I remember from accountancy, salary is an operational expense and not a cost of sale.

You'd be better asking something like this on AccountingWeb or similar - there are bound to be a lot of opinions on this and getting it wrong could be awful for your business.