DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Fixed Assets - record as Start-up Costs


#1

Dear All,

I would like to introduce the costs of my fixed assets as Start-Up costs.

I had

  1. made a list of my fixed assets, as described in the Guide
  2. Purchased the Assets using Receipts&Payments

As a result, my Profit&Loss account doesn’t get affected in any way.

In the Manager guide I had read that " A typical exception is to allow the entire cost of a fixed asset to be recovered in a single year as a current expense under specific circumstances."
https://www.manager.io/guides/7277?utm_source=app

However, there is no more explanation to it. How can I reflect the costs of my Fixed Assets in the Profit&Loss Account as Start-Up Costs?

Thanks a lot.

S.


#2

Acquisition of fixed assets will not normally be reflected in the profit and loss statement. Fixed assets is a balance sheet account. Only current depreciation and profit or loss on the disposal of fixed assets shows up as expenses or income.

The Guide you linked to covers a special situation where fixed assets can be expensed faster than normal. It is about the extra record keeping necessary in most jurisdictions to do that. If this is permissible in your jurisdictions, your tax authority or accountant can tell you about the requirements.

Your subject mentions start-up costs. Unless you are referring to starting balances, start-up costs are no different from any other cost a business incurs. If you are referring to starting balances, those only come into play when migrating an ongoing business to Manager from another accounting system.


#3

Hi Tut,

Thanks a lot for you answer. I know one option would be to depreciate the fixed assets over e.g. 4 years and introduce this as Loss, however, I had a good year this year, and I would like to decrease my profits a bit, so that I would pay less taxes. I live in Luxembourg, and as I know it, I am aloud to declare 100% of the equipment costs as Start-up costs in the Profit and Loss Account.
I had also purchased the equipment on the last day of the year, with the aim of increasing my expenses, so I can not apply any depreciation on it.

I only made one course of accountancy (recently) so that I could do my books on my own. However, many things are automatised in Manager, so that so far I have never did a double entry, like I learned to do on the paper. I only saw that the “Journal” in the Manager allows us to do it (but is for some reason not recommended for recording real payments by Manager).

So I am trying to understand the workflow, but I admit I might make mistakes due to my lack of practice as well.

So, assuming that I am 100% sure I want to declare the fixed assets as Expenses, what can I do? Should I redo everything using Journals? Or should I add an extra line in the “Payment”…?


#4

Every transaction you enter in Manager is a double entry. You just do not have to make the debit and credit decisions. For example, when you enter a payment from a bank account for some expense, Manager credits the bank account and debits the relevant expense account. The reason you cannot make monetary transactions as journal entries is not because they are not double entries. It is so less experienced users do not make mistakes in determining what is the debit and what is the credit.

The first thing is to determine whether, under local law, the assets must be depreciated over time to recognize their cost. If so, there is nothing you can do. You will be governed by regulations, which generally do not allow a full year (or even a quarter or month) of depreciation if you only owned them for one day.

But, as described in the Guide mentioned previously, many tax authorities allow accelerated depreciation under certain conditions. You may be able to claim the full cost on the date of purchase. If the assets must be classified as fixed assets because of their lifetime and cost, but accelerated depreciation is allowed, simply enter the depreciation. It will show up in the automatic Fixed assets - depreciation expense account. Read this Guide: https://www.manager.io/guides/9119.

On the other hand, if local regulations permit, you might not have to treat the assets as fixed assets at all. If they fall below a certain threshold, you may be able to simple enter them as an ordinary purchase with a payment transaction.


#5

Hi Tut,

Thanks very much for your time! I will try as you say to depreciate certain assets. I know for sure I am allowed to by law.

All the best,

S.