It seems like you specifically instructed the software to show an opening balance of 25k cost less 1.7k accumulated depreciation.
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 ā suppose a customer overpaid you, you donāt just go to their edit screen and enter it as a starting balance because thatās just Wrong and thatās analogous to whatās been done here.
So I donāt see any problem with Manager in this regard.
Also, Iām 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 itās expected to do.
I think you should let an accountant do this for you instead of struggling with this.
Thanks @Ealfardan, I did not enter the Acquisition Cost in the Opening Balance, Manager did. Thatās the crux of one of my problems.
Opening balance for this period is last periodās 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.
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 ā by definition ā 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 canāt find how to include in the reports to the customer; thatās 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.
Thereās a lot of confusion here that we need to clear out, so letās take this step by step:
That fully explains why your assets go into the opening balance. Even if the ending balance matches, you shouldnāt be doing this because it will mess up your books.
Not really. If the asset is purchased during the current period, it opening balance is Zero and itās 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. ), hereās 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 āadditionsā, 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 Managerās) depends on the acquisition date of that specific asset.
And more importantly ā¦
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 didnāt 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 itās 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.
So it isnāt acquisition cost and accumulated depreciation ā really, but rather Starting balance of acquisition cost and Starting balance of accumulated depreciation. Thereās is a significant difference financially speaking.
Iām sorry but I donāt 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:
Letās consider this asset that was bought in this period
Note that itās 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.
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:
This method applies the maximum allowable depreciation as per Australian regulations. This offers the maximum tax advantages allowed in Australia, so it is legal ā No need to worry .
Maybe you should consider switching to this method to slow down your tax outflows.
Diminishing Value. I rarely use straight line depreciation; even though it can reduce taxable income I believe it misrepresent the value of the business to the business owners / shareholders.
@Ealfardan Starting Balance - yes - of Acquisition Cost and Accumulated Depreciation. The net effect of showing these as Opening Balance is mathematically correct the Tax guidelines clearly show Acquisition Cost and Acquisition date as historical records used to determine the Opening Balance. The Book Value is shown in the Balance Sheet as Acquisition Cost and as Accumulated Depreciation. In this regard Manager works fine.
There is no difference between Acquisition Cost and Starting Balance of Acquisition Cost".
Acquisition Cost is a historical record that never changes.
Re: ABC. Manager is different because it represents Acquisition Cost as Opening Value in the Fixed Asset Summary. It reports correctly in the Balance Sheet and therefore the Balance Sheet and Fixed Asset Summary are contradictory. The fact that they are both mathematically correct is irrelevant. The Balance Sheet is primarily for reporting to the owners of the business while the Fixed Asset Summary report is for use by the managers of the business. This leads to management discussion with the owners being at misleading and crossed purposes; much I think as this discussion has become.
I can happily include the Acquisition Date as a Custom Field and it shows on the Fixed Assets listing but I canāt see any way to use it. There does not seem to be a way to include it in any reports.
My method; the method used by the ATO specifically allows for Additions. In fact the way Manager works the Column called Acquisition Cost, the ATO would call Addition Cost.
Yes the Depreciation process works but the Fixed Assets Summary report is WRONG.
As I replied to @Joe91 I predominantly only use Diminishing Value Depreciation.
Right-of-use land. Oops - my bad. And if I rad the latest ATO UCA guidelines Straight Line Depreciation is no longer available
Deductions for the cost
of depreciating assets
Since 1 July 2001, UCA apply to most depreciating assets,
including plant. Under UCA, deductions for the cost of a
depreciating asset are based on the decline in value of
the asset.
no the āOpening balance acquisition costā never changes in a business.
A Fixed assets current acquisition cost is the sum of the Opening balance acquisition cost + purchase costs allocated to that asset acquisition cost account during the time the businesses accounts are recorded within Manger
@Patch We are talking at crossed purposes here. Please use the standard ATO terminology.
Opening Balance is the Net Book Value at the beginning of the accounting period. It changes (reduces normally) from period to period based on the amount of depreciation calculated for the period.
Acquisition Cost NEVER changes, irrespective of whether the Acquisition Date was 3 years ago or today. In the event of today the Acquisition Cost is the same as the Opening Cost (opening N.B.V.) mathematically. The depreciation calculator uses the in-period Acquisition Cost as the Opening Balance for calculating the period depreciation and in-period C.W.D.V. (closing NBV) equals (in this case) Acquisition Cost minus Depreciation Expense. In all these respects Manager works as required.
The Fixed Asset Value report does not show this correctly and is misleading.
As @Patch says we try to explain to you how Manager terminology is used and how this can be interpreted not only by ATO but by any tax authority of any country. Indeed this is an English language forum only while many Manager users use their local languages in addition to their tax authority jargon. As you came on board last month it is important to realize this so that the argument is not how Manager should change its terminology to ATO, but how you can interpret it for your ATO use.
@Patch And I think that is a large problem with Manager, that the nomenclature it uses is not standard and introduces conflicts between what it says and what it means. This is misleading, leads to errors and limits its usefulness.
Extremely disappointing because, as a techo as well, I applaud the creative approach to systems design; very much a Unix like design.
Maybe you should modify this sentence to āā¦not standard in Australiaā¦ā It begs the question though why an Australian company led by @lubos would develop Manager for the rest of the world only and not make it suitable for fellow Australians?
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Not really. If the asset is purchased during the current period, it opening balance is Zero and itās entire cost goes into acquisition column.
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