Clicking on that yellow label heading shows the Australian localisation sets up https://www.manager.io/guides/40315
The headings used by all users are not changed
The Fixed Assets Summary is the only report Iāve found that is not. Look at the attached ATO Depreciation Worksheet and you see that each line shows Date of Acquisition, Cost and Opening Adjustable Value.
@Tigadad, your PDF link was deleted because it posed a risk to other users.
For those who want to read the rest of the 48 page guide on calculating depreciation see this ATO page Guide to depreciating assets 2022 | Australian Taxation Office
Note the the calculations approach is required not the exact document.
Basically, at a quick glance, the depreciation is either declining balance or fixed annual amounts - so nothing out of the ordinary there
There are exceptions for various tax advantaged bits and pieces, nothing that invalidates the way Manager handles Depreciation or Asset reporting
Looking at the Australian Taxation Office sheet below (screenshot taken from ATO website PDF)
I understand where @Tigadadās arguments stem from. Ideally one could create a single custom report that has similar information. Yes, we can find all the information also in Manager such as the acquisition cost and date from drilling down on the payment of the inventory item, and yes one should be able to live with the different terminology.
However, because all this data is somewhere in Manager, ideally we should have the ability to create custom reports and ideally modify some terminology if to be able to even make our work easier.
As argued before, I think that Manager does record the information and data correctly but that there is some inconvenience in the ability to create custom reports or keep it altogether.
I wholeheartedly agree with the sentiment of your proposal here, however, I still have some remarks.
A new Custom Report implementation is underway, so we will have to wait and see about the new implementation.
Terminology can already be changed according to language and it should be easier for a dialect such as Australian English, however, judging by the translation work for other languages, this might cause some unwanted friction and politics over the ācorrectā terminology. So it should be up to the Australians (@lubos & @patch included) to determine whether that is the case or not.
As for user specific preferences, Iām all in for that provided that this does not result in any overheads in terms of performance. Also, we already have column aliases in custom reports which I think is enough ā that is if the solution was through custom reports.
Regarding this particular case, I donāt believe that the depreciation sheet in question is a required return, this is just a resource provided by the ATO to assist taxpayer, i.e. it is optional. @Patch can back me on this.
Back to @Tigadad, could you please reiterate your problem more clearly given all the new information. Will it be solved by @ekoās suggestions?
@eko @Ealfardan @Patch Thank you @eko , succinctly put. I have always said the Manager calculates depreciation correctly; It is the reporting that is problematic.
Re: the terminology, the meaning of the terms is clearly explained in the ATO depreciation guide and this is the root cause of my original question. together with the need for the Acquisition Date. Manager correctly calculates depreciation based on the Opening Balance but Opening Balance does not always equal Acquisition Cost. It also very convoluted.
Example. You buy an existing business with fixed assets.You pay $1000 for an asset that has been depreciation at 10% D.V. (or some other Diminishing Vale Depreciation Rate) for a few years. The $1000 is the Acquisition Cost but not the Opening Value (Opening Adjustable Value). Under the Tax rules the Opening Adjustable Value is the N.B.V. of the asset in the hands of the seller at the time of sale. This might only be $800 and you therefore make a Capital Loss which you can claim as a Capital Deduction. Conversely a N.B.V. of $1200 would result in a Capital Gain that is Assess-able as Capital Income. The Acquisition Date and Acquisition Cost are at the āpurchase dateā but the Opening Balance (Opening Adjustable Value) is different. You also need to consider if GST is payable on the Capital Event, whether you are buying the Assets as part of an ongoing business (no GST) or as a ājob lotā or individual purchase of the Asset(s) with GST.
The effective life of the asset in your hands will be different to the published effective life (ATO guidelines) because the effective life is calculated from the original Acquisition Date of the Asset; as in the hands of the seller.
This is particularly important when you buy a property or business with extensive fixed assets. You have to determine the N.B.V. of the assets at the time of purchase, either from the N.B.V. detailed by the seller or by calculating the present market value of each asset. In the many cases I have come across this results in a Capital Gain to the purchaser because they effectively bought the assets as a ājob lotā with the property / business at less that present value.
I hope this explains the difficulties with the Fixed Assets Summary screen and the convoluted method of calculating depreciation.
@eko @Ealfardan @Patch When you transfer from another accounting system the situation is different. The Acquisition Date remains the same as does the effective life. Acquisition Cost is the original cost paid, perhaps years before, and the Opening Balance is the N.B.V. as start of reporting period.
Opening Balance in Manager is the balance when the Manager is first used to record your businesses accounting.
Manager is a continuous accounting system, the books are not closed at the end of each financial year. That is handled in Manger in accordance with this guide Close an accounting period | Manager
@Patch Thanks again. I understand that Manager uses Opening Balance to calculate depreciation but it considers Acquisition Cost as Opening Balance which is plain and simply incorrect; as I explained in great detail earlier.
I understand that Manager is a continuous accounting system. This is a bit unconventional but I can deal with that right up to the point where it is wrong; and the only problem I have come across is the issue of Acquisitions and Opening Balances.
I admit I am coming late to this conversation but, my first comment is that it is unrealistic to expect that accounting records are going to match taxation records and I do not think that the ATO expects that.
If you are presenting your accounting records correctly there is always going to be adjustments that are needed to be made for submission of your tax return.
The second comment that I would make is that I have records of fixed assets in my Manager database spanning the years from 2006 to present date and I cannot fault the reporting of the Fixed Asset Summary Report. Even selecting start and end dates that span many years the report information is correct.
What you need to realise is that the āOpening Balanceā in the report reflects the existing balances of the fixed assets as at the beginning date of the report - not the database start date. Likewise the closing balance is the closing balances of the fixed assets at the ending date of the report.
The other four headings represent the movements during the period of the report and I do agree with previous comments that some of the terminology used in these headings is confusing. Specifically I would make these suggestions regarding the terminology:
Acquisition Cost be replaced by simply āAcquisitionsā or āAdditionsā or even āAcquisition Costsā.
Consideration Received be replaced with āDisposal Considerationā.
I also agree that the inclusion of an acquisition date that could appear in the report would be a good idea.
As for different depreciation start date to the purchase date a Works in Progress account should be used with journal to fixed asset on the depreciation start date.
@AJD A considered response indeed.Nice one.
I have the opinion that accounting records and tax records MUST match; that is what the ATO expects and thatās the meaning of the legislation. Yes, there are all but always final adjustments to your accounts before submitting the tax return, whatās in the accounts must equal the tax return; if not you are in big trouble if the ATO ever audits your accounts.
Second: Yes the Fixed Asset Summary Report works. The process is just complicated and error prone as well as tiresome. Having to do multiple Depreciation Calculations a month is a waste of time.
Your comment about Opening and Closing balances is exactly what I have been saying. Thank you. The problem is complicated by the fact that Manager does not care about recorded dates of Acquisition. Acquisition date is the date the item was purchased or first brought into service (there is a difference). Your comments about opening and closing balance also matches mine. A small thing to consider is that Acquisition Cost and Opening Balance are not always the same.The ATO uses the term āOpening Adjustable Valueā. If you buy a second hand asset from a business the Acquisition Date for you is when you purchase it. However the effective life for depreciation purposes starts from the Acquisition Date in the hands of the previous owner. In this case the Opening Adjustable Value is the depreciated value (the Closing Balance) in the hands of the seller. It is not what you paid for it. The depreciation rate you use is based on the remaining life, not the total life.
If the accounting records and the tax return do not match the ATO would only expect that you have a valid explanation of why there is a difference. The ATO should never demand that they match because some of their requirements do not follow accounting standards.
The Depreciation Calculation Worksheet report makes calculation easy as it can be pushed to a Depreciation entry. It can be used on a monthly basis by creating the report for the appropriate number of days in the month. For example: for the 2022-23 year use dates 1/7/22 to 31/7/22 for 31 day months, 1/7/22 to 30/7/22 for 30 day months, and 1/7/22 to 28/7/22 (or 29/7/22) for February.
I donāt think that this is correct. Usually the agreed selling price of depreciable assets is detailed in the contract of sale. If you are buying a business that includes depreciable assets the vendor will want to list the price of the depreciable assets at the Written Down Value (WDV) or lower to avoid a balancing charge that increases their tax liability, but the purchaser will insist that the depreciable assets be listed at agreed Fair Market Value (FMV) so they can avail of greater depreciation claim on their tax returns (arms length transaction).
That is: the Opening adjustable value for the purchaser is the agreed consideration between the vendor and the purchaser (acquisition cost for the purchaser) and it is the Closing depreciable asset value for the vender and the difference between the consideration and the vendors WDV is taxed in the hands of the vendor via the balancing charge.
The ATO requires depreciation only form the date an item is first in service. So if an item is purchased and later installed or building works are done with progressive payment then use is started after handover, it is the later installation or handover date that depreciation can commence from, not the payment or invoice dates.
So in Manager some care is required with depreciation calculation for the first period of any item. A useful enhancement would be for Manager to use a commencement date however as few new items are added to my depreciation schedule each period, doing this manually is not that onerous for me.
In this case a WIP account should be used as per my comment earlier in this thread
That would work.
In practice I have a custom field for date āIn serviceā and calculate depreciation from that date for the first period. After which no special processing is required.
As interesting as this topic may be to some, it long ago strayed from having anything to do with Managerās functionality. From the start, it has been about interpretation of terminology. I have closed the topic.
