How to track Capital Cost Allowances?

[Kolby_G]

Hey all,
I’m trying to figure out an easier way to track CCA’s, and I’m wondering if there is a way to do this in Manager that I am missing.
Here is a couple links to the CRA that can explain what I am trying to do a bit better:

Claiming capital cost allowance (CCA) - Canada.ca

Classes of depreciable property - Canada.ca

Basically I need to track an expense, but only claim a certain portion as outlined in the links above. The following year I can claim another portion of it and so on. Currently I use an excel spreadsheet for this, but with 100’s of items per year all in different classes it’s getting pretty annoying.

Any ideas?

[Brucanna]

Your best bet is to set up a proper Depreciation Schedule system, to my mind excel would be to manual.

You would purchase and record the fixed asset in Manager as per normal.
You would enter the asset into the Depreciation Schedule system which would handle all the calculations - then at each year end you would Journal across the calculated depreciation into Manager.

With the availability of Custom Control Accounts in Manager, you can group the assets into related groups which could be by type or by rate or use both. Then you have the choice of depreciating either by per asset (large) or operate one provision for depreciation account per group (multiple small) rather then trying to enter the depreciation per item.

You would set up the same asset structure in both the Accounts and the Scheduler for easy of Journals. Search the Web for Depreciation Schedules

[Tut]

Read the Guides:

Purchasing fixed asset

To enter a fixed asset you purchased, firstly you need to create the fixed asset. Go to Fixed Assets tab. Click New Fixed Asset button. Enter details of the fixed asset. Click Create button. Once you create the fixed asset, you will notice the purchase cost is zero. This is because under double-entry accounting you cannot simply enter the purchase cost without entering the actual purchase or payment transaction. Purchase of the fixed asset can be recorded under following tabs: Cash Account…

Depreciating fixed asset

To depreciate a fixed asset, go to the Fixed Assets tab. Click on the figure in the Accumulated Depreciation column. This will transfer you to the depreciation register for the selected asset. You can now use the New Depreciation Entry button to enter the depreciation expense amount.

What @Brucanna addressed was calculation of depreciation, which Manager does not do. Manager only records purchase costs and depreciation to determine book value. His comment about depreciating groups refers to grouping assets of similar type and depreciation schedule to perform common calculations. In Manager, you cannot actually apply depreciation to a group unless the assets are being treated as a single piece of property.

Your statement that you have hundreds of items per year makes me wonder whether you really need to capitalize all of them. Check local tax laws to see whether they can be expensed. Even if they must be capitalized, you may be able to claim the full value in one year through some accelerated depreciation scheme. Again, check with a local accountant about this. But if you can, see this Guide:

Expense fixed assets

The cost of a fixed asset is normally recovered through depreciation over its economic life. Only current depreciation is treated as an expense each accounting period, even though the full cost of the asset might have been paid when it was purchased. However, some local tax authorities allow fixed assets to be treated as current expenses under exceptions to normal practice for various reasons, including: Promoting business investment Reducing administrative burdens Encouraging small business …

[Brucanna]

@Tut

In Manager, you cannot actually apply depreciation to a group unless the assets are being treated as a single piece of property.

You can if you create a Provision for Depreciation account that stands separate from the asset group.

[xero50]

This is how I tackle depreciating the assets.

Background
Here we have two “levels” of depreciation. Firstly, depreciation for accounting purposes, and secondly depreciation for taxation purposes.

For accounting purposes, one is supposed to take a balanced view as tho the useful working life of the asset and depreciate it accordingly. How you do this is largely up to you, but you are required to be reasonable and sensible.
For taxation purposes, the taxation authorities prescribe the allowable rates of depreciation for certain types or classes of assets.
So, what you end up with is two registers of assets running side-by-side depreciating the assets at different rates. The value of the difference between the two registers is known as “deferred tax”, and is stated in the published accounts of the business.

Now, this all sounds a tad complicated and many people simply keep their own register for accounting purposes only, and have their accountant apply and re-state the taxation depreciation values when submitting the accounts on their behalf to the taxation authorities. However, arithmetically, what is happening is quite simple. (always worth remembering that at the end of the day, this sort of thing is just arithmetic).

Firstly, the tax authorities specify prescribe “pools” for certain classes of assets. For example Commercial Vehicles in one group, Plant & Equipment in one group, Office Equipment in one group and so forth.

So, following the authorities lead, I create a spread-sheet for each class or pool of asset and set the depreciation rate desired, and then just post the summary total of each pool to Manager using the journal facility.

I find that once you have got this set-up, it’s quite easy to keep on top of it, and once a month, I do my journals from a pre-prepared schedule as it typically For me at least) proves to be quite repetitive in nature.

Here’s a screen-shot of a part of an old register that I use, but it illustrates what I am trying to describe:-

Obviously, the detail of how you handle this will vary in different jurisdictions around the world, but the principle should hold good.

[Tut]

@Brucanna

You can if you create a Provision for Depreciation account that stands separate from the asset group.

If I’m understanding you correctly, @Brucanna, this is exactly what I meant when I mentioned treating a group as a single piece of property. I did not say it very artfully. @xero50 is saying the same thing, but calling the groups pools. In fact, @xero50’s implementation could be handled via the Fixed Assets tab rather than journal entries by defining those pools as assets.