I have a fixed assets which i pay in 6 terms (monthly). I get a invoice every mont and have to pay this within 14 days. How can i set this fixed asset? i read the guide about fixed assets but i don’t understand it
Should i make a fixed asset, and then put in there the complete amount my costs are or should i monthly put the amount i pay monthly in the fixed asset?
Second question. The depreciation have i set to 5 years. But does the program automatically accounts the depriciation each year or do i have to do this myself?
That is a Balance Sheet liability account. You create it at Settings => Chart of Accounts => New Account. You won’t actually find that terminology anywhere in the program. That is just a way of referring to which type of account it is and where on the chart of accounts it is located. This is common accounting terminology.
So lets say i bought a computer and it costs 1200 euro. I can pay this in 6 monthly terms of 200 euro. So i first make a fixed asset which i call computer. When i get the first invoice for 200 euro i make a booking of 1200 euro on the fixed asset computer. And a 1200 euro booking on the liability account. In the second month when i get the second invoice for 200 euro i put this invoice on the liability account and so on until the 1200 is paid. But when i do it like this than there is 1200 on fixed assets (which is correct, but there is 2400 on the liability account. 1200 and 6 times 200 euro) or am i doing something wrong? Next question is about where i put it under in the chart, because can i also book it at office cost??
And last question: how do i fix the depreciation than? I will spread it over 5 years. I followed the guide with the four custom fields i had to make and i made them. so is it that each year i click on the fixed asset and manualy fill in the depreciation (1200/5) ?
THNX again and sorry for all the questions, but i think some things in bookkeeping are difficult to understand.
[Edit: @remyvandemortel, I notice that you posted your most recent response while I was writing mine. So I have edited the content below to match your example and hopefully answer additional questions.]
Please understand that in my earlier reply, I was only answering your question about the definition of a balance sheet liability account and where to create one.
Actually, to record and manage fixed assets in Manager, you do not have to create the account @Brucanna described. Manager handles things automatically. The steps are quite simple:
Enable the Fixed Assets tab. This automatically creates several accounts, including Fixed assets, the corresponding contra account Fixed assets - accumulated depreciation, Fixed assets - depreciation, and Fixed assets - loss on disposal. The first two will appear under Assets category. The last two will be under Expenses category.
Under the Fixed Assets tab, create the asset. Now you can do things with it in Manager.
Purchase the asset. In your case, since the seller is financing the asset by allowing you to pay in installments you have two choices: (a) Enter one purchase invoice for the full amount, let us say 1200. Allocate it to Fixed assets => Specific asset. Your asset will show with a book value of 1200. This will be balanced by 1200 in Accounts payable. As you make monthly payments, the Accounts payable balance will decline. This is financially equivalent to the balance sheet liability account @Brucanna mentioned, because Accounts payable is a liability account on the balance sheet. The problem with this approach is that you may only have an initial invoice from the supplier for 200 and would need to figure out what to do with the remaining 5 invoices when they arrive. This could be handled if there is documentation showing the full 1200 purchase price. The invoices could be regarded as statements of current amounts due. Or, there is alternative (b). Create the purchase invoice for only 200, matching the first invoice. Your asset will show a book value of only 200 and be balanced by Accounts payable of 200. This is financially sound, because you will only have invested 200 in the asset at this point. You will actually own only 200 of the asset’s 1200 total worth. The remainder still belongs to the supplier. As subsequent invoices arrive, allocate them exactly the same way. The book value of the asset will increase with your investments in it.
Pay for the asset. This is different from “purchasing” it. This involves only Spend money transactions to pay off the purchase invoices and reduce Accounts payable.
Depreciate the asset. The allowable expense of the asset in a given financial period is recorded as depreciation. In the Fixed Assets tab, click on the blue balance for the asset under Accumulated Depreciation, even if that balance is just a dash (for zero). Make a New Depreciation Entry. The expense will appear in the Fixed assets - depreciation expense account, balanced by an increase in the Fixed assets - accumulated depreciation account on the balance sheet. How much each depreciation entry should be depends on your depreciation schedule. It could be straight line depreciation, with equal amounts over 5 years. In that situation, you could make one annual entry of 240. Or you might want to depreciate it in monthly increments of 20. Or, your tax and accounting regulations might allow non-linear depreciation, with more at the beginning. However you decide to do it, Manager still requires you to figure the amount of each entry.
Of course, the difference between the asset’s current value in Fixed assets and its depreciation total in Fixed assets - accumulated depreciation is its book value.
One last caution: if you use any of the built-in depreciation accounts, you need to use all of them, because they are hard-coded to interact with one another. And you cannot delete any of them once you have used them for a fixed asset. It sounds as if your experimentation was trying to mix built-in accounts with manually created ones. That does not work.
THNX very much for the answers. i got it fixed i think. I did it with option B TUT gave me so each time i get a invoice, i book this invoice in the fixed asset and than click spend money(when i’m in the invoice screen looking at the invoice) when i paid the invoice so the invoice isn’t an open invoice anymore. . (think this is correct???)
One more question. Can i put the costs under for example office suplies or something? because they are actual office suplies but don’t get on the profit and loss account that way. they are only standing on the Fixed assets, but not on the account for example in this case office suplies.
and the last question. I see on the balance when i make a depreciation:
fixed asset - cumulative depreciation -60,27.
Should this be on the balance account?? or should that be somewhere on the profit and loss account? so should it be on the left site of the screen under balance or on one of the accounts on the right side of the screen (profit and loss account)? or should i make a journal and put it form the left to the right side?
Not if the item is a fixed asset. Could only be possible if your tax authority has issued a small asset write off authority - meaning that any fixed asset under a set value can be written off immediately instead of being held as a fixed asset
It is on both, the account is called - Fixed Assets, Accumulated Depreciation on the Balance Sheet and Fixed Assets - Depreciation on the Profit & Loss.
At the end of the first year both accounts will have the same values, but after that they will have different values.
No. By definition, a fixed asset is being capitalized. Only the depreciation during an accounting period is considered an expense. The bigger question, though, is why you are capitalizing office supplies as fixed assets. Fixed assets generally must have an economic life longer than some threshold, usually one year. Office supplies are current expenses like stationery, pencils, or paper clips of relatively small value or that you expect to consume in the near future.
Yes, definitely. This is a contra asset account. You will notice the value of a fixed asset does not decline in the Fixed assets account, but its offsetting accumulated depreciation increases, eventually becoming equal to the cost. The difference between the two is book value. As I’ve already said, only current depreciation shows as an expense.
Your questions suggest you are not very familiar with double-entry accounting. I recommend spending a few hours on one of the many good web sites learning the basics. Otherwise, you will have no idea what Manager is meant to do. You might start with http://www.accountingcoach.com.
question about this image. Is this than the correct way or should i make a journal entry to get the 60,27 to the line at the red Arrow? (it’s dutch and says fixed asset - depreciation)
So just for my curiousity i wandered if i did it correct this way?
THNX and i will read the link you gave in your answer tut. THNX again.
No. Definitely do not make a journal entry for depreciation. In fact, Manager would not let you do that. The particular account can only be accessed by following the instructions in #5 of my second post on this topic.
3 times sorry i made a big mistake.
I set the starting date for the period on 1-1-2017, but the depreciation have i booked on 31-12-2016. because i can do depreciation once a year at the end of q4. so thays why i didnt see the 60,27 on the profit and loss account under the named red Arrow.