On Mon, 16 Jan 2023 at 16:27, Michael or Penny Novack < stepbystepf...@comcast.net> wrote:
> On 1/16/2023 7:29 AM, Dr. David Kirkby wrote: > > Apologies if this is too much an accounting question, but I'm stuck, and > am > > trying to work out how GnuCash will handle this. > > It is accounting, as opposed to gnucash, but I will help. But please do > note that perhaps more basis in double entry accounting needed than > just the tutorial if doing for a business. > > Thank you. I do have a couple of books on accounting, but admit to not reading them in full. I thought this was an equity issue, so read the sections about that, and was not convinced that using equity was correct. > > OK, I will describe what you SHOULD have done and how to get from where > you are to there. > > Ideally under fixed assets you have sub accounts, perhaps first by > acquisition year and under that for the individual things (or group of > same type). All of these accounts should have two sub accounts, one for > basis (cost of acquisition) and one for depreciation taken, the > difference being the current net book value. Note that USUALLY > depreciation is adjusted annually, as you are not required to do > monthly, AND this is to your advantage if/when any are disposed of (will > decrease any gain and increase any loss if you are allowed to use as net > value remaining that of the previous year end) > Thank you. I'm surprised the business accounts in GnuCash don't have anything resembling this. I realise the accounts are supposed to be tweaked, but this is *significantly* different to the business accounts in Gnucash. Maybe they should be altered to have 5-10 years, and some items that people are likely to buy. > > Getting there from where you are should not require you changing > anything in equity. You would just be "transferring" from your initial > structure of fixed assets to this new one. The "credit side" is account > in the old structure as you debit into the new structure. Thus, you can > rename (for now) you existing account "fixed assets" (in which nothing > broken down to something like "xfixed assets" and create your new fixed > assets tree with all the accounts in it zero. You then populate the new > tree using transactions that put in the values using the old structure > (single account) as the other side of these transactions. When you are > all done, the remaining balance in xfixed assets should be zero and you > can HIDE it. > Interesting. It's actually tempting to put *all *the assets the company has ever purchased, including those written off. It means adding 55 more assets, which is not a huge number. Although not strictly accurate, it would not seem unreasonable to write them off after 5 years in one go, rather than each year, given their net value is zero. If one writes of X in one year, Y in 4 subsequent years, and Z in another year, it does not seem unreasonable to write off X + 4 Y + Z in one go, if the result is the same - the net value is zero. However, although entering 55 new transactions would not be too time-consuming, it would if I had to set up 55 new vendors for items that have no value. As I remarked in another email, I wonder if buying from a vendor called "Written Off" or something similar would be sensible. A vendor report of Written Off would be interesting reading, despite it has no significance. I do have information on the vendors these things are purchased from, and need to keep them for 7-year. But I don't want the hassle of importing every transaction into GnuCash for 7-years. Each year as you depreciate (part of end of fiscal year processing) the > other side of the transaction will be an account under expenses named > "depreciation of fixed assets. You could set up to do monthly but WHY? > (what benefit do you gain vs what does this cost you). Remember, > depreciation is an expense but does not represent any money flowing in > or out. The money went out when you acquired the fixed asset (but you > weren't allowed to treat that as an expense at the time). > I thought monthly might work better with trying to automate what will be a tedious process. The GnuCash Scheduled Transactions could possibly be useful there. > Michael D Novack > I don't think I will bother with that. _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
