When selling a fixed asset and issuing a receipt for the sale the following account selection is available:
However if a Sales invoice is used the balance sheet cost account is not available as per this:
Many businesses would want to issue an invoice for sale of fixed asset transaction and be able to select the BS cost account so that the sale consideration appears on the Fixed asset summary report.
I have a vague memory of @lubos addressing why the fixed asset cost account (there used to be only one) was not included on sales invoices. This would have been several years ago, before custom control accounts, etc. But, search as I might, I could not find such a post.
@generalegend, your thoughts make sense to me for some use cases. I would be curious to learn what @lubos’ current thinking is, especially with all the recent additions having to do with fixed and intangible asset depreciation.
Thanks @Tut, I will wait for Lubos to respond
This is another instance of an increasing number where Manager has artificial contradictions.
In this case, a “Cash” sale has full access to the chart of accounts, whereas a “Credit” sale has restricted access to the chart of accounts.
A sale is a sale and the “terms of payment” shouldn’t dictate the chart of accounts accessibility.
I have another fixed asset sale that I need to record using a sales invoice and would like to be able to select the Balance Sheet fixed asset account so that the sale consideration appears on the Fixed Assets Summary Report.
@lubos is there a reason why it is not possible to select the Balance Sheet Fixed Asset account when issuing a sales invoice (rather than just issuing a receipt) for the sale of a fixed asset?
If not, may I request that this issue is classified as a bug, (so that it is not overlooked)?
My understanding, when you dispose of an asset you do 2 things
Write off the residual book value allocating the cost to the “Loss on Disposal” profit and loss account (an internal business decision)
If the item has a residual real value, sell it and allocate the proceedings of the sale to the same “Loss on Disposal” account (a transaction with an external party for a price independent of any book assets current book value)
After which the asset has zero value on the Balance sheet accounts. And the Profit and loss accounts show the net cost or profit from disposing of the asset.
I’m not sure it makes sense to apply profit / loss from disposal & sale of an asset to a balance sheet account as that would leave a residual book value for an asset you no longer have.
The reason the fixed asset balance sheet account can be selected from receipt / payment is that is how the purchase is recorded when the business first bought the asset.
Edit
Thinking about it I suppose it comes done to the order step 1 and step 2 are done in / supported.
An alternative is to support selling an asset (allocating profit to the asset account, then disposing the asset (allocating any profit or loss to a “Loss on Disposal” Profit & loss account).
Manager appear to currently support order initially described but maybe there is a case to support the opposite order.
I’m not sure about the accuracy of the Balance sheet when a sales invoice and book value apply concurrently. It maybe confusing to users as if sold above book value that would results in a negative book value when disposed in Manager.
You are correct @Patch. The traditional way to dispose of an asset is to first calculate and charge depreciation to the date of disposal and then journal the cost and the accumulated depreciation to a loss/gain on disposal of fixed asset account. This effectively puts the WDV at disposal date into the Loss/gain account. Then if the asset is sold the consideration is also credited to the Loss/gain account. Then the remaining balance in the loss/gain account represents the loss(debit balance) or gain (credit balance).
Journal 1. Debit: Loss/gain on disposal (P&L)
Credit: Asset cost (B.S)
Journal 2 Debit: Asset Accumulated Depreciation (B.S)
Credit: Loss/gain on disposal (P&L)
Sales invoice/Receipt. Debit: AR/Cash
Credit: Loss/gain on disposal
If it is done this way it provides more clarity as the loss/gain account shows all the values separately. I would prefer to do it this way.
However, if it is done this way in Manager.io the Fixed Asset Summary does not display the consideration and displays an incorrect amount for the loss/gain.
Like this:
As opposed to this:
As the title to this thread states this is an issue of consistency and it could also be corrected by removing the ability to select the Fixed asset cost account in the Receipt, but then the Fixed Asset Summary Report would also need to be corrected.
On experimenting with a test business in Manager 20.5.26, I agree Fixed asset in Manager do appear to behave like a work in progress
| Entry method | Positive amount | Negative amount |
|---|---|---|
| Purchase invoice | Increase Acquisition cost | Increase Consideration received |
| Payment | Increase Acquisition cost | Increase Consideration received |
| Sales invoice | Asset accounts not available | Asset accounts not available |
| Receipt | Increase Consideration received | Increase Acquisition cost |
| Entry method | Positive amount | Negative amount |
|---|---|---|
| Purchase invoice | Increase Acquisition cost | Decrease Acquisition cost |
| Payment | Increase Acquisition cost | Decrease Acquisition cost |
| Sales invoice | Increase Consideration received | Decrease Consideration received |
| Receipt | Increase Consideration received | Decrease Consideration received |
Note supporting negative value adjustments is useful to correct errors and adjustments such as
You don’t apply any profit / loss to a BS Asset account. You only post the consideration received to the BS Asset account and then the Asset’s residual is transferred to either a P&L Profit on Sale or Loss on Sale account.
That is not correct. You can buy and recorded the fixed asset via a Purchase Invoice and the BS Asset cost account is available for selection. It is just with the Sales Invoice, that the BS Asset cost account can’t be selected.
My preference is for the current Manager process, posting the consideration to the BS Asset cost account as it is cleaner in my view, when it comes to transferring out the profit or loss.
One should maintain separate Profit on Sale and Loss on Sale accounts. If the Asset disposal is done via journal then the residual book value is always a loss, so transferred to the Loss on Sale account. If the consideration is greater than the residual book value then you have a Profit on Sale, which means the journaled Loss on Sale needs to be transfer to the Profit on Sale.
