Accum. Depreciation/Depreciation expense: Custom control/expense accounts

[AJD]

[16.7.65] Extended ability to create custom control accounts

In the latest version, it is now possible to have multiple control accounts for most subsidiary ledgers: Cash accounts Customers Suppliers Inventory items Fixed assets Intangible assets To create custom control account, go to Chart of Accounts and click New Account button. When creating new account you will notice Control account checkbox. If you tick the box to indicate you are creating control account, you will need to specify what this control account is made up of. Example Let’s say we…

See the above thread where there was a request for the custom control account function be extended to include Fixed asset accumulated depreciation

I would like to support the request for this functionality.

e.g. Balance Sheet

Fixed Asset - Buildings (cost) $120,000
(less) Accumulated Depreciation - Buildings ($10,000)

Fixed Asset - Equipment (cost) 80,000
(less) Accumulated Depreciation - Equipment ($6,000)

Also, I would like to be able to select a custom P&L depreciation expense account.

e.g. P&L

Depreciation - Buildings $4,000
Depreciation - Equipment $2,000

(Please consider these requests for the “ideas” category)

[Patch]

I agree this is a good idea when using control accounts to categorise fixed assets.

If my reading of this idea is correct, that would mean if control accounts were set up as per the guide for “Land & Buildings”, “Motor Vehicles”, and “Furniture”. And assuming the naming convention used by default for “Fixed assets” is retained. I think that would mean the following items would show on the summary page under the “Assets” heading:

• Furniture
• Furniture, accumulated depreciation
• Land & Buildings
• Land & Buildings, accumulated depreciation
• Motor Vehicles
• Motor Vehicles, accumulated depreciation

I think the Asset Summary would be more informative if it instead showed the current asset value for each of the asset classes, so in the above example only the following items would be displayed under the “Assets” heading:

• Furniture
• Land & Buildings
• Motor Vehicles

Or if explicit control accounts were not used:

• Fixed assets

With the value for each showing a single number = Initial value - depreciation.
That would also be consistent with other assets such as “Cash at bank” which shows the current bank balance not the sum of all deposits and separately the sum of all withdrawals. Hopefully accumulated depreciation is stored in a such a manner that calculating it for each control account rather than overall is readily achievable.

For drill down behaviour on the fixed asset control account value, linking it to the current fixed asset page applicable to that control account would be logical. From there the purchase cost and accumulated depreciation could then be independently examined for each asset. Is there some other function which would be lost if the item “Fixed asset, accumulated depreciation” was not shown as a separate summary item with it’s associated link?

On the “Profit and Loss Statement” side retaining a single entries for “Fixed assets - Depreciation” and “Fixed assets - loss on disposal” works well for me, however others may want this split to match the control account definition (as suggested above).

[Tut]

@Patch, there is nothing inherently wrong with your thinking. But accounting tradition has been to show assets as an ordinary account and corresponding accumulated depreciation as a contra account. What you are suggesting would just show book value, which is typically found on a supplemental schedule of assets.

[Patch]

I suppose what is lost is a summary level measure of business exposure to any differences between book value and actual value. A business cost when individual assets are disposed off. It is however a rather crude measure, as old large items with a low true current value will obscure actual current business exposure.

If Book value was only shown on the summary page, users would need to click on the book value of each control account (Furniture, Land & Buildings, or Motor Vehicles) to see a screen similar to the current Fixed Assets tab, but showing the total asset value, total depreciation, and again total book value, together with the details for each individual asset. A useful management summary in my opinion but not conventional so I’m probably in the minority.

While Fixed Asset purchase price and Fixed Asset accumulated depreciation continue to be shown on the summary screen. I assume most users are creating a group for Fixed assets. So using the current software capabilities the cart of accounts would contain some thing like
Assets

• Current Assets (Manually created Group)
• Cash at bank
• Fixed Assets (Manually created Group showing total fixed assets book value)
• Furniture
• Land & Buildings
• Motor Vehicles
• Fixed assets, accumulated depreciation

Similarly if the program was enhanced to enable Fixed asset control accounts to have individual accumulated depreciation, the typical chart of accounts would probably be
Assets

• Current Assets (Manually created Group)
• Cash at bank
• Fixed Assets (Manually created Group showing total fixed assets book value)
• Furniture
• Furniture, accumulated depreciation
• Land & Buildings
• Land & Buildings, accumulated depreciation
• Motor Vehicles
• Motor Vehicles, accumulated depreciation

Or more usefully showing book value on the summary screen for each Fixed asset class:
Assets

• Current Assets (Manually created Group)
• Cash at bank
• Furniture (Manually created Group showing Furniture book value)
• Furniture
• Furniture, accumulated depreciation
• Land & Buildings (Manually created Group showing Land & Buildings book value)
• Land & Buildings
• Land & Buildings, accumulated depreciation
• Motor Vehicles (Manually created Group showing Motor Vehicles book value)
• Motor Vehicles
• Motor Vehicles, accumulated depreciation

And given that level of detail on the Balance Sheet side of the summary page, I agree the Profit and loss side would be better if “Fixed assets - Depreciation” and “Fixed assets - loss on disposal” was also split to match the control account definition (as suggested in the opening post).

So that would also be workable, just involves a greater screen space allocation on the Summary page.

Regardless of the summary page display, I would like to see totals displayed at the bottom of the page in the Fixed Assets tab (similar to the Bank Accounts, and Receipts & Payments tabs). Ideally also similar page displayed when drilling down on a Fixed asset control account but without native display of book value, it may have to be a sort or search function in the Fixed Assets tab.

[Tut]

Don’t forget that one reason assets and accumulated depreciation are usually separated is that some jurisdictions mandate revaluation of assets regularly (usually annually) while others do not. Historically, that’s easier to accommodate when asset values are shown separately, rather than being buried in book value.

[Abeiku]

Yes, when you are doing different projects and want to show expenses related to each project separately on the income statement, you may want to show depreciation charges of fixed assets related to each project separately, that is among their respective project expenses list. This is the situation in my Company now. ( I currently achieve this with tracking codes since the cost/revenue centre setup in the organisation is straight forward i.e. Projects)

Another example is showing depreciation expenses among its functions e.g. depreciation of fixed assets used in selling and distribution, production, etc be grouped with their respective functions.

It calls for the need for custom depreciation expense account.

You can nicely set up Fixed Asset in the fixed asset tab with custom fields to show you balances of every group of fixed asset’s accumulated depreciation with sorting, it currently won’t be shown in balance sheet report but you could export and get what you want easily though it time consuming.

The request for a report showing accumulated depreciation for every group of asset is already in ideas. See

Additional report for Fixed Asset

Hello @lubos The current fixed Asset summary report is great but I feel more could be done to improve fixed Asset reporting. Most users create various control accounts to handle fixed asset reporting. For example, Control accounts for Furniture and Fittings, for Motor Vehicles, for Computer and Accessories and for equipment. It would be nice if there was a report that could display Asset Summary according to their control account as shown below; [Annotation%202019-02-17%20085720] This report…

[danielgalindezm]

@Tut

Don’t forget that one reason assets and accumulated depreciation are usually separated is that some jurisdictions mandate revaluation of assets regularly (usually annually) while others do not. Historically, that’s easier to accommodate when asset values are shown separately, rather than being buried in book value.

Just to point out that in some other jurisdictions is exactly the opposite. You have to show the NBV of all kind of assets in the Balance Sheet. So, in my case I have to made this split in a spreadsheet to “modify” the Balance Sheet. So I think it would good to have the option to either point the Acc Depreciation to one single account or to individual accounts by kind of asset.

As for the Depreciation Expense, I don’t know of any regulatory requirement to split such expense. I think the use of this would the depend on the internal needs of every company.

[abdulbari]

can we have the option to choose the accounts for
Asset GL Account
Depreciation GL Exps AC
Acc Depreciation GL AC

have the option to add our own choice while creating the asset name would give more choice to all the users who would like to use either once account or distribute the same into different category account

this could be implemented the same way as done now for Tax Code. before the system will create the control account or GL Account for system generated Tax codes but now we have the option to choose which account we need

[Tut]

That is essentially what this idea is about, however it might be implemented.

[Panashe_Mlambo]

The separation of each account make it easier when preparing financial statements

Disclosure in terms of IFRS or IFRS for SME requires each class of assets to be disclosed separately.
eg.
Furniture & Fittings
Buildings
Computer equipment

At the moment I am not making use of the asset register on the system as it does not achieve what I need. I have created all my accounts manually and process the depreciation via journal entries. When I export my trial balance into Draftworx / Caseware its easier to map accounts to the relevant financial statements line item.

[lubos]

Added to the latest version (20.2.76)

Under Settings tab, then Control Accounts, you can create custom control accounts for accumulated depreciation.

Custom control accounts can be then selected when editing individual fixed assets

The same has been implemented for accumulated amortization within intangible assets functionality.

[Abeiku]

Great job @lubos

[Joe91]

Excellent - this is a great new feature

[San_Thida_Myo_Latt]

Thanks
If possible, allow user to choose expense account at fixed assets

[Tut]

Custom control accounts apply only to the balance sheet.

[Abeiku]

Yes but the topic is also about custom expense account

[lubos]

The latest version (20.2.77) is adding ability to select custom expense accounts for depreciation and disposal as well.

[San_Thida_Myo_Latt]

thanks, i will check and get back to you

[San_Thida_Myo_Latt]

Thanks, it’s working as expected

[AJD]

I have just got around to making changes as a result of this update. Thanks @lubos this is an excellent set up and so easy to implement.