Hello. My business involves mining, thus involves buying of heavy machinery. I haven’t fully paid off certain machinery, so I’m not sure how to record it. In particular, what value to assign to it as an asset, and if I should indicate the balance to be paid as a liability. Also, how should future payments to clear said balance on the machine be indicated?
Any help will be appreciated.
Presumably, such equipment would be treated as fixed assets. See these Guides:
https://www.manager.io/guides/9106
https://www.manager.io/guides/9119
https://www.manager.io/guides/9121
https://www.manager.io/guides/9107
You are clearly not into accounting.
If you acquire an asset and pay fully you lose some asset (usually cash) to obtain it. If not, there will be some liabilities (under Accounts Payable)
If partially paid , there will be a lose of some asset (usually cash) and then a liability.
The value of the asset should be recorded fully even if not fully paid.
So let say you buy an asset from Mr A of 1000 and you made a payment of 500 follow the steps below.
Create Mr A as a Supplier
Create the asset under fixed asset
Create a purchase invoice selecting the asset and entering the full amount of the asset there.
Now you will see the asset showing under fixed asset with the full amount and also a balance of 1000 for Mr A under Accounts Payable.
To record the part payment,
Go to spend money
Create a spend money transaction, select accounts payable and select Mr A and select the purchase invoice number and enter the amount there.
You should see the correct balance payable to Mr A
Thank you @Abeiku for your detailed reply and @Tut for the guide links. I’m still learning, never took an accounting lesson in my life. I’ll follow your instructions.
Something that has been linked a few times on this forum, and which you may find useful, is this website: