Fixed Asset by Value incorrectly reports Acquisition Cost as Opening Value

Thanks @eko, I understand what you are explaining. I just point out that this is a serious programming design error that makes this truly wonderful program pretty much useless.

Which is what Manager does.

To see it more clearly create a balance sheet control account for the asset classes

  • Acquisition Cost
  • Accumulated Depreciation

Manager will then show the sum of these which is there book value.

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I’m sorry to say this, @Tigadad, but you are just plain wrong. As with another recent thread, you continue to misinterpret clear explanations in the Guides. Many, many Australians successfully use the software in full compliance with Australian tax laws.

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Thanks @tut. The Fixed Asset Summary is just plain and simple wrong.

Opening Balance is the Book Value at the end of the last reporting period / start of the new reporting period. It has no Accumulated Depreciation. The opening balance is the figure used to calculate Depreciation over the current period. I have not completed a full accounting period yet, but from what I can glean from the Guides it appears that the Acquisition Cost will be lost when replaced by next periods Opening Balance ???

Acquisition Cost is the Original Cost when first purchased, perhaps years ago and hence you need the Acquisition Date to know when, as you need this to complete the tax return and for calculating Base Cost of a GST event. I think you pointed out that the Acquisition date is used to calculate the depreciation for the partial period and I don’t have a problem with that.

In the case of converting from another accounting system to Manager it is most simple to do it at the start of a new accounting period (new FY). At this point the Acquisition Cost minus Accumulated Depreciation equals Opening Cost, which is what manager uses to do the depreciation calculation. I understand that. This also means that you have to run multiple Depreciation Calculations when you purchase multiple assets during the reporting period; I see that. The problem is that without an Acquisition Date you have to try and remember when the item was purchased or tediously troll through transactions to find it. When you have 26 Divisions, 14 Locations, 1500 Assets, 1000 transactions per month spread across 12 associated trusts, partnerships and distributions that idea becomes nonsense.

The report itself is factually incorrect, even though behind the scenes Manager makes it work. The purpose of the report is to report the value of the business to the owners but it does not.

As to my misrepresenting the explanations in the Guide I can only say that they are difficult to understand because they are too brief and use terminology peculiar to Manager. This is compounded by the non-standard interpretation of Australian Accounting Standards. It would not be a problem if the Guides were more complete.

You are correct Manger starts depreciation from the time and asset is purchased not when it is in service. It would be better if it allowed for this but typically the financial difference is small so may not be worth the accounting effort in many cases.

Why not just add the date to the description field when setting up the asset?
This was accepted by an ATO auditor.

Thansk @VACUUMDOG, that’s what I have done to preserve the information but you can’t search on the date. I have since created a Custom Field to capture the data. I just need to find out how to access it.

You can search by date

@Patch, I can’t disagree with your comment but the reports are not just an accounting report, they are a report to the business owners.

Hi @Tigadad :slightly_smiling_face:,

It seems like you specifically instructed the software to show an opening balance of 25k cost less 1.7k accumulated depreciation. :point_down:

To record a transaction that happened in this period you should use any one of the transactions tab to record the asset like Purchase Invoices, Payments or even Journal Entries.

What you have done is that instead of correctly accounting for the acquisition, you erroneously entered the acquisition cost in the opening balance.

It works just like Receivables – suppose a customer overpaid you, you don’t just go to their edit screen and enter it as a starting balance because that’s just Wrong and that’s analogous to what’s been done here.

So I don’t see any problem with Manager in this regard.

Also, I’m not sure how you came to this conclusion:

The opening balance by definition is cost less accumulated depreciation and accumulated other movements. The reports just breaks it down as it’s expected to do.

I think you should let an accountant do this for you instead of struggling with this. :wink:

On another thought. I wonder if the absence of a start date is a cause to this kind of confusion.

Thanks @Ealfardan, I did not enter the Acquisition Cost in the Opening Balance, Manager did. That’s the crux of one of my problems.

Opening balance for this period is last period’s closing balance. It equals Acquisition Cost minus Accumulated Depreciation. Opening Balance cannot have a separate Accumulated Depreciation entry because Accumulated Depreciation is used to calculate it.

I understand your comment about in period purchases and that is perfectly logical.

If you look at the Tax standard depreciation schedule you will see the error in the current system.

Re: your reference about having an accountant do this; I have supported accounting practices, designed and written business and accounting systems, and studied tax law for over 30 years. I have an MBA, DipInfoTech in project management and networking, and a Cert IV in Bookkeeping. I have been the financial controller for 5 different companies with many more trusts for many years, encompassing even more businesses. In short, I am not a novice.

Manager deals with Fixed Assets and Depreciation in a very unusual way. I makes managing them more difficult but by and large I can make it work. Right up to the point where it presents incorrect or incomplete information in the Fixed Asset Summary.

When you start a new accounting period with a new system the Acquisition Cost and the Opening Balance ARE NOT the same. Opening Balance is Acquisition Cost minus Accumulated Depreciation. I learnt that in Year 11 at High School. The Fixed Asset Summary incorrectly lists Acquisition Cost and Accumulated Depreciation under Opening Costs and nothing under Acquisition Cost. It also does not matter whether you are entering Opening Balances for the accounting period or purchasing a new item; the same rules hold true.

In the beginning it was until I understand the strange way Manager calculates Depreciation; but it still a problem because you need the Acquisition Date in preparing Tax and Capital Gains returns.

I’m not sure if we’re on the same page here. I’m talking about this screen and not the report:

Do you mean Manager entered the acquisition and accumulated depreciation in Starting Balance in the Fixed Asset?

Yes, as it should based on input in the screenshot above. In order for the acquisition to take effect as on 1/5/2023, there must be a Zero Starting balance and a transaction dated 1/5/2023 showing the cost. This is where Manager gets the acquisition date from.

To sum up, if the cost is coming from Starting balance it will always show up as Opening balance in the Fixed Asset Summary report. This is because starting balance – by definition – always precedes whatever date you put in your reports.

@Ealfardan Yes I am talking about that screen. I input the Acquisition Cost and work out the Accumulated Depreciation and enter that. Manager puts this in Opening Balance at Cost and Opening Balance Accumulated Depreciation in the Summary.

I used the date 1/5/2023 to prove how it was working but the date only shows in the list of assets and I can’t find how to include in the reports to the customer; that’s problem number 2.

Problem number 1, as I have explained many times, is that the Opening Balance is ONLY equal to Acquisition Cost when the asset is purchase within the current accounting period; which I believe agrees with what you are saying.

The difference is that when the asset was purchased prior to that the opening balance equals Acquisition Cost minus Accumulated Depreciation at the start of the accounting period. Accumulated cost always stays the same and Accumulated Depreciation is increased by the Depreciation Expense for the accounting period, therefore always equating to the Closing Written Down Value (C.W.D.V.) or Book Value in Manager.

If manager posted the Acquisition entries as entered on the above screen to the Acquisition Column and the calculated Opening Balance in the Opening Balance Column all could be good. I can work with the strange (non standard) way Manager calculates Depreciation Expense but it makes it much harder because you have to find the date you bought an Assets and manually run multiple Depreciation Worksheets. This is not necessary in a standard Depreciation Worksheet as per ATO guides working on Acquisition Dates irrespective of when the Asset was purchased.

Depreciation worksheet is used once per year.

If you are transferring from another accounting system in starting balance you enter

  • Acquisition cost = what you initially spent to acquire the asset
  • accumulated depreciation = the total depreciation in the past (recorded in your old accounting system)

Then when you calculate depreciation for the next period (the first for Manager), Manager will calculate a depreciation of:-

(Acquisition cost - accumulated depreciation) x depreciation rate

The next year the calculation is is repeated with a larger accumulated depreciation (starting balance + depreciation in Manager)

There’s a lot of confusion here that we need to clear out, so let’s take this step by step:

That fully explains why your assets go into the opening balance. Even if the ending balance matches, you shouldn’t be doing this because it will mess up your books.

:thinking: Not really. If the asset is purchased during the current period, it opening balance is Zero and it’s entire cost goes into acquisition column.

On the other hand, if the asset was bought before the current period its acquisition cost goes into opening balance, its accumulated depreciation goes into opening balance, and their net value is your opening book value.

What better example than ABC (Australian Broadcasting Corp. :slightly_smiling_face:), here’s their ROU Assets movement summary schedule from their annual report:

You can clearly see their opening NBV or carrying value as on 30 June 2021 is broken down into cost less accumulated depreciation and so does the closing NBV or carrying value as on 30 June 2022.

The opening value figure is the sum of all additions and all other movements prior to 30 June 2021.

After that comes the line labeled “additions”, which are basically acquisitions that occured in between the opening and closing dates or from 30 June 2021 until 30 June 2022.

Whether an acquisition is considered opening or additions ([new] acquisition in Manager’s) depends on the acquisition date of that specific asset.

And more importantly

By this do you mean that the 25k you have shown includes an opening balance plus some later acquisitions?

@elfarden thanks for the obviously consider reply. If I may comment from the top down.

If I am not supposed to put the Acquisition Cost and the Accumulated Depreciation in the co-named fields why are they maned so.

The second point I didn’t complete the statement - my bad. Your comment is correct. What I was trying to say is that Opening Balance is equal to Acquisition Cost for the purpose of calculating Depreciation in this instance.

The ABC report confirms my comments. Gross Book Value (2021) is the Acquisition Cost; as indicated by it’s value not changing year on year; minus Accumulated Depreciation (2021) minus accounting period Depreciation (2022) equals Closing Net Book Value. Closing Net Book Value 2021 is the Opening Book Value for 2022.

This problem arises because of the strange method Manager uses to calculate depreciation and the Asset Value report is just plain wrong and the fact that you lose the historical data (Acquisition Date). I agree with your comment about opening and addition to the schedule.

As to the last comment, no that is not correct.Because we are converting from another system we have all of Acquisition Cost, Acquisition Date and Opening Value (NBV). The 25k goes in Acquisition Cost and the date in Acquisition Date (if there was a place to put it) and the 1700 goes in Accumulated Depreciation. The NBV goes in Opening Balance and Accounting Period Depreciation is calculated from this NBV, recorded in the Depreciation Expense and added to the Accumulated Depreciation for year end.

And if the ABC report you show is the Australian Broadcasting Commission then we will ignore the fact that is wrong because Land is not a depreciating asset.

What method of depreciation do you use?

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That’s because they are clearly labled as Starting balance as illustrated here:

So it isn’t acquisition cost and accumulated depreciation – really, but rather Starting balance of acquisition cost and Starting balance of accumulated depreciation. There’s is a significant difference financially speaking.

I’m sorry but I don’t see how Manager is any different.

Not if you have followed the proper accounting procedures. Please allow me to demonstrate how you can get the acquisition dates:

  1. Let’s consider this asset that was bought in this period

    You can clearly see that it’s been acquired for 2,200 BHD and later depreciated by 147 BHD

  2. If you click on Edit to see how it was setup, you find out that it has no Starting balance

  3. Going back to screenshot (1) If you drill down the link for Acquisition cost (2,200.00 BHD) you will get the breakdown of it’s cost:

    Note that it’s acquisition date is 1/1/2023, which is the same date of the original entry for the asset.

In fact, I would go as far as to argue that the current method is superior to the method you use in that it allows multiple acquisition cost for original acquisition, revisions and enhancements that will be shown in screenshot (3) each with its own date.

The Acquisition Date you refer to is a Custom Field that is not built into Manager. It would never influence how the program works in any way.

Many thanks to @Joe91 for thinking of this.

You must be referring to Straight Line Depreciation method which Manager does not calculate automatically. If you wish to use Straight Line Depreciation, you will have to create the depreciation entry manually.

The method that Manager calculates is Declining Balance Depreciation as indicated in the guides:

for more details, please refer to this guide:

This method applies the maximum allowable depreciation as per Australian regulations. This offers the maximum tax advantages allowed in Australia, so it is legal – No need to worry :slight_smile:.

Maybe you should consider switching to this method to slow down your tax outflows.

Yes it is for ABC and it is correct :grimacing:.

The depreciation isn’t for Land but for Right-of-Use of Land according to IFRS 16.

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