So I used the Expense Claims to put in a fixed asset and updated the acquisition that way. I also paid the expense claim towards it.
If it is money spent on the fixed asset, shouldn’t it show up in the expenses somehow and reduce profits? Because I know that money was spent but my profit and loss statement is looking a little too fat for my liking.
Hi @Marjorie, welcome to the forum.
Manager’s built-in Fixed Assets tab only handles fixed assets as assets, since this is by far the most common treatment of asset acquisitions. This is what is expected by IFRS and other GAAP. And so it’s the recommended approach.
However, you can create a regular Profit and Loss account in case you don’t want to capitalize any assets and instead have them expensed.
Purchasing a fixed asset does not affect your Profit & Loss account in any way
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@Marjorie, what @Joe91 and @Ealfardan wrote does not, perhaps, fully answer your question. The expense of fixed assets normally does eventually show up on your profit and loss statement. But it does so little by little in the form of depreciation, handled in Manager through the Depreciation Entries tab. See the Guide: Depreciate fixed assets | Manager.
Only if local regulations permit accelerated recovery of capital investments—usually within strict limitations—will the full cost appear on your profit and loss statement in the period when you buy the asset. See this Guide: Expense fixed assets | Manager.
Thank you Tut. This clears up all the confusion I had. Thank you @Joe91 and @Ealfardan as well. I will make sure to use the resource @Joe91 has given me to beef up my knowledge.
Maybe to just add in laymen terms what the benefit is of this approach. Assume you purchase an Asset for 100,000 and it is supposed to last for 10 years. Rather than expending it in year one where it will show as -100,000 for that year it now will be expended over 10 years at -10,000 per year. This will spread the P&L. Manager depreciation would be linear, however you could also decide to do your own scheme with more depreciation in first years and less later. If you have a business usually you would in any case have lots of expenses in the first years so spreading these over the years will ensure a much smoother transition towards net profit figures even when net losses are carried forward. Succes!