Re: Two Income Statement patches: Assets Value
Andrew Sackville-West wrote: I don't want to rain on your parade, but in my opinion this is the wrong thing to do. What would be better is to have a separate balance sheet report that provides the delta over a time period. I don't begin to know how to do that, but IMO, it is the proper thing to do. Allowing assets into an income statement flies in the face of any accounting I've seen. Note that IANAA. A I'm finally going to jump in here too. It has been very frustrating to be expected to answer basic accounting/bookkeeping questions being trated as what facility within GnuCash because the reality is that like ANY accounting package, GnuCash can't help you with what should I be doing? sort of questions. OK -- Andrew is completely correct here. However different Canadian tax laws the basic accounting wouldn't be different. What accounts and how reported, yes. I believe the confusion is between the individual reports produced by GnuCash and the report (complete financial statement) needed for reporting purposes. The USUAL process is that the individual reports are generated, think of them as data and turned over to the accountant who uses them to produce the finished product. That will at least be an Income Statement and a Balance Sheet but might include other specialized reports depending on what the complete financial report must contain (cash flow might be important, distinguishing between unrestricted and restricted funds might be important, for a 501c3 distinguishing the source of funds, qualified or unqualified might be important). For example one of the organizations for which I keep the books is a 501c3 and the standard (GAAP = generally accepted accounting principles) format for presenting reports to the board of directors (and also used for tax purposes) would be 1) Income statements (not called that in the finished product as non-profit accounting uses different langauge) for the current period side by side with that of the previous period. 2) Balance sheets for the ends of the two periods (same as the start and end of the current) also side by side. 3) Anything requiring explanation annotated (like footnotes, but using the endnote format) 4) Any special accounting procedures specified in a general note (say what fixed assets subject to depreciation and by what rule) I asked the accounting type person to whom I was turning over the data (two Income Statements and two Balance Sheets as produced by GnuCash) if I should try to create a custom report to put all that together (I've written a few hundred thousand lines of financial system code in my day, so COULD do it). He said definitely not, that this was the accountant's task, that every accountant would have his or her own favorite editor, and as produced by the proposed custom report, would STILL need to be edited at least to insert the annotation so savings of effort minimal. In other words, to produce a finished product would be more than a custom report. Would need an EDITOR that took the custom report as input and allowed the accoutant to then edit it. That's a LOT of work for very little gain. Suitable editors already exist for accountants to use and all that would be saved is the copy/paste of data. If there was only ONE finished product format required perhaps worth while but that's not the case here. What a formal report for a 510c3 looks like not necessarily the same as for some other form of organization. Back to the original question which was really how do I properly keep the books to reflect depreciation and what information must I be able to report for my jurisdiction. That's NOT a GnuCash question. That's a basic business accounting question in this case with emphasis on Canadian tax law. It simply isn't fair to expect the user guide of GnuCash to cover such a wide range of user needs from hand to mouth cash flow personal budgeting to acounting for a 510c3. A work covering such a range would be a massive tome with each end user interested in just a tiny portion AND total beginners at accounting might get inot worse trouble if wandering into the wrong sections. Frédéric, my best advice to you is go to a library where they have a number of accounting texts, look in the index in the back of each for depreciation, then see how good the section of this book is covering that topic, and select the best book to learn from. To me (also) the very thought that you picture the depreciation accounting (as opposed to the total depreciation expense transactions) would show up in the Inccome Statement tells me that you are starting at the very beginning of this subject. This is double entry bookkeeping. ONE side of the transactions recording depreciation ends up as an expense; the OTHER side of those transactions is what affects the balance remaining of each fixed asset being depreciated (and will affect the Balance Sheet). Michael D Novack, FLMI PS --
Re: Two Income Statement patches: Assets Value
On Thu, Jan 29, 2009 at 09:33:03AM -0500, Mike or Penny Novack wrote: Back to the original question which was really how do I properly keep the books to reflect depreciation and what information must I be able to report for my jurisdiction. That's NOT a GnuCash question. That's a Actually, it was not. But I can certainly understand how it could seem that way to you. My question/need was actually technical: how much money went into asset account X last year? [*] This need comes as a result of two things: * Under Canadian law, the half-year convention applies to everything. * Most (if not all) of my assets are actually small things, regrouped into generic accounts. I'll be damned to create a specific account for each USB stick I've ever purchased; they all get dumped into Computer Equipment. Taken separately, these two issues wouldn't be a problem at all; applying the half-year rule to an account that only has one asset is easy as pie. But when you've got years worth of stuff in there, you really need to know how much was bought/sold this year, ie. how much falls under the half-year rule. (I guess most businesses don't give a rat's ass about their USB sticks, or simply cheat and declare them as expenses. Lucky them. g) Now, I'm not claiming that this patch is a good idea, or even that it works for other people. Heck, you still have to manually add back any amount withdrawn for depreciation. But it sure beats going through the account and adding a bunch of transactions manually. All of this to say that I needed an answer to how much did I spend on USB sticks (an asset account), just like how much did I spend on cat food (an expense account). Being lazy, I came up with the easiest method possible. I hope I'm making sense. :) [*] Come to think of it, this is strikingly similar to: How much did I contribute to my RRSP/IRA/401(k) this year? -- Beeping is cute, if you are in the office ;) -- Alan Cox ___ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel
Re: Two Income Statement patches: Assets Value
I'd use the cash flow statement to answer this question. The cash flow statement should show you how much an account changed in a period. You could use the report in a multi-column format to have 1st-half and 2nd half of the year. Specifically, if you set up the report to use your fixed asset and accumulated depreciation accounts, you will see how much your assets changed by adding new assets and depreciating or writing off old ones. Good luck, Mike. From: Frédéric Brière fbri...@fbriere.net To: Mike or Penny Novack stepbystepf...@mtdata.com CC: gnucash-devel@gnucash.org Subject: Re: Two Income Statement patches: Assets Value Date: Thu, 29 Jan 2009 12:03:42 -0500 On Thu, Jan 29, 2009 at 09:33:03AM -0500, Mike or Penny Novack wrote: Back to the original question which was really how do I properly keep the books to reflect depreciation and what information must I be able to report for my jurisdiction. That's NOT a GnuCash question. That's a Actually, it was not. But I can certainly understand how it could seem that way to you. My question/need was actually technical: how much money went into asset account X last year? [*] This need comes as a result of two things: * Under Canadian law, the half-year convention applies to everything. * Most (if not all) of my assets are actually small things, regrouped into generic accounts. I'll be damned to create a specific account for each USB stick I've ever purchased; they all get dumped into Computer Equipment. Taken separately, these two issues wouldn't be a problem at all; applying the half-year rule to an account that only has one asset is easy as pie. But when you've got years worth of stuff in there, you really need to know how much was bought/sold this year, ie. how much falls under the half-year rule. (I guess most businesses don't give a rat's ass about their USB sticks, or simply cheat and declare them as expenses. Lucky them. g) Now, I'm not claiming that this patch is a good idea, or even that it works for other people. Heck, you still have to manually add back any amount withdrawn for depreciation. But it sure beats going through the account and adding a bunch of transactions manually. All of this to say that I needed an answer to how much did I spend on USB sticks (an asset account), just like how much did I spend on cat food (an expense account). Being lazy, I came up with the easiest method possible. I hope I'm making sense. :) [*] Come to think of it, this is strikingly similar to: How much did I contribute to my RRSP/IRA/401(k) this year? -- Beeping is cute, if you are in the office ;) -- Alan Cox ___ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel ___ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel
Re: Two Income Statement patches: Assets Value
Frédéric Actually, it was not. But I can certainly understand how it could seem that way to you. My question/need was actually technical: how much money went into asset account X last year? [*] This need comes as a result of two things: * Under Canadian law, the half-year convention applies to everything. * Most (if not all) of my assets are actually small things, regrouped into generic accounts. I'll be damned to create a specific account for each USB stick I've ever purchased; they all get dumped into Computer Equipment. Taken separately, these two issues wouldn't be a problem at all; applying the half-year rule to an account that only has one asset is easy as pie. But when you've got years worth of stuff in there, you really need to know how much was bought/sold this year, ie. how much falls under the half-year rule. (I guess most businesses don't give a rat's ass about their USB sticks, or simply cheat and declare them as expenses. Lucky them. g) Again, I am not an accountant. But I think if you look at a standard accounting text you WILL see how to do this. I have to account for fixed assets and their depreciation and so I know how to do that (though at the moment, no fixed assets*). Depending on your tax laws, you might even have to have different depreciation schedules for fixed assets purchased in the same year and so more than one account under parent for fixed assets purchased in year X (or half year X -- here in the US don't need to get any finer than by year). So no, you would (presumably) not have to have an account for each USB stick purchased in period . Just one account for fixed assets purchased in period X subject to the same depreciation schedule). And BTW -- you are right that businesses might be immediately expensing small items. They simply need to make that clear in their accounting procedures. Most places tax laws are reasonable in that regard. A mechanical pencil (or USB stick) might in fact last several years but small items of that sort allowed to be treated as consumables and immediately expensed as office supplies. Normally you go through the whole fixed assets rigamarole only when you are required to: 1) Your tax laws won't let you treat this item as a consumable. 2) The item has a substantial value and so not carrying it on the balance sheet distorts the financial position. One or both of these and you do all that work of accounting for the fixed asset and its gradual conversion to an expense over time via depreciation. OK -- I will try to describe what I would be doing. Our rule* is anything under $400 is expensed and depreciation over three years. The tree for fixed assets would look like .. Fixed assets ... ..(dead accounts that are fully depreciated --- but they MIGHT be needed later -- sale of fully depreciated assset is a gain) Purchased in 2006 Purchased in 2007 Purchased in 2008 Purchased in 2009 Now take that account Purchased in 2006. It would contain transactions for all items purchased in 2006. I would put those in a sub account and have a second subaccount for the depreciation of those items because easier math that way. Purchased in 2006 Items Depreciation During 2006 each fixed asset pruchase was a transaction to the Items account. After the end of 2006 no more transactions add any items so that total becomes the basis for fixed assets purchased in 2006. At the end of 2006, 2007, and 2008 a depreciation transaction for 1/3 of that balance is entered (and as an depreciation expense for that year, the other side of the transaction). So after the third year the balance will be zero, fully depreciated. If later something gets sold, will be income (gain from disposal of fully depreciated asset) or maybe an expense (had to pay somebody to cart it away). Old fashioned pen and ink on paper would maybe just have the one ledger account (as the debit side total remains constant after end of year). But with GnuCash and similar software you are shown balance and that's why I would prefer the subaccount method. Michael D Novack * We are allowed to set a reasonable de minimis amount and also allowed to set an arbitrary depreciation time period. But we're a non-profit in the US and your rules could be quite different. As has come up on this list before, including the text of the statement of practices we use is part of our formal finacial report. -- There is no possibility of social justice on a dead planet except the equality of the grave. ___ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel
Re: Two Income Statement patches: Assets Value
I'd use the cash flow statement to answer this question. The cash flow statement should show you how much an account changed in a period. You I also find that transaction report does a good job of adding up new entries over a period. ___ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel
Re: Two Income Statement patches: Assets Value
On Sat, Jan 24, 2009 at 05:46:08PM -0500, Frédéric Brière wrote: [Please CC any replies, as I'm not subscribed] Hi guys, I switched my business accouting from a clunky home-made script+database to Gnucash several months ago -- kudos for all your work! Having now finished my first tax report based on Gnucash's reports, here are two things I found lacking in those reports: * In addition to revenues and expenses, I also needed to know how much was spent on assets, for depreciation purposes. Unfortunately, even though I can select asset accounts for an Income Statement report, only income and expenses accounts are displayed in the end result. Substracting last year's balance sheet from this year's kinda sucks (especially when coupled with the second point). I don't want to rain on your parade, but in my opinion this is the wrong thing to do. What would be better is to have a separate balance sheet report that provides the delta over a time period. I don't begin to know how to do that, but IMO, it is the proper thing to do. Allowing assets into an income statement flies in the face of any accounting I've seen. Note that IANAA. A signature.asc Description: Digital signature ___ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel