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multiple capital asset allocation from single transaction
Following on from the post on allocating capital assets - http://community.freeagentcentral.com... I would go as far to say that while the feature is considerably useful (select a purchase category of "Asset Purchase" when explaining a bank transaction, and have the asset automatically added to the Asset pool with depreciation calculated etc), it is a bit inflexible, especially so when you are buying several items fin the same transaction, some of which you may not wish to be considered as assets.
As an example the dilemma that I am currently facing is that I have purchased a number of photographic equipment from a friendly photographer to use in our business.
A number of items are clearly assets - camera, lights, printer etc. (with prices of several hundred pounds) and would ideally be listed in the asset pool as individual items; potentially with different depreciation life-spans and percentages (the ability to add serial numbers, set the asset description and other pertinent information - location, asset tracker no, declared item to insurers would also be appreciated).
Some items purchased in this transaction are clearly not assets - consumables such as media packs (photo paper + printer ribbon), small items such as cables, lighting stands etc.
To add to the problem, the vendor has kindly allowed us to pay him by regular installments, so I have entered the invoice (covering all items) as a bill payment.
The bill payment entry only allows me to allocate the items to a single category - I've chosen Capital Asset at the moment, but the several assets in the transaction are lumped together with non assets - certainly not ideal from an asset owner's point of view and this skews the company's balance sheet with respect to asset net book value/depreciation charges etc.
The one transaction covers two requirements - the bill payment entry is useful in cashflow forecasting and tracking/associating intermediate payments (but could also be an invoice receipt paid for in one transaction); at the same time individual items from that transaction need to be entered separately into the Asset Pool.
Suggestion:
Remove "Asset Purchase" from the categories provided when explaining a bill or bank statement entry - users should select "Office Equipment"/"Computer Software"/"Computer Hardware"/etc as appropriate when explaining the purchase.
Within the overall Company Information allow user to set a threshold over which a single item purchase will be considered an asset (default value £300 for example)
When a bill is created or a purchase transaction is over this threshold, offer to create an asset entry from the information provided, allowing the user full customisation of the asset entry details. Repeat until transaction value less total value of registered assets (from the transaction) is < than the threshold.
May need to credit the account that the entire transaction was explained to with the value of the newly created assets to avoid skewing the current year's P & L figures.
And/Or allow user to manually create Asset entries, but instead of creating a manual bank entry (as currently) use (new) asset registration page, allowing user to associate it with a (previously uploaded) bank account entry (use date of purchase on asset entry to limit bank account entries on pick list?)
As an example the dilemma that I am currently facing is that I have purchased a number of photographic equipment from a friendly photographer to use in our business.
A number of items are clearly assets - camera, lights, printer etc. (with prices of several hundred pounds) and would ideally be listed in the asset pool as individual items; potentially with different depreciation life-spans and percentages (the ability to add serial numbers, set the asset description and other pertinent information - location, asset tracker no, declared item to insurers would also be appreciated).
Some items purchased in this transaction are clearly not assets - consumables such as media packs (photo paper + printer ribbon), small items such as cables, lighting stands etc.
To add to the problem, the vendor has kindly allowed us to pay him by regular installments, so I have entered the invoice (covering all items) as a bill payment.
The bill payment entry only allows me to allocate the items to a single category - I've chosen Capital Asset at the moment, but the several assets in the transaction are lumped together with non assets - certainly not ideal from an asset owner's point of view and this skews the company's balance sheet with respect to asset net book value/depreciation charges etc.
The one transaction covers two requirements - the bill payment entry is useful in cashflow forecasting and tracking/associating intermediate payments (but could also be an invoice receipt paid for in one transaction); at the same time individual items from that transaction need to be entered separately into the Asset Pool.
Suggestion:
Remove "Asset Purchase" from the categories provided when explaining a bill or bank statement entry - users should select "Office Equipment"/"Computer Software"/"Computer Hardware"/etc as appropriate when explaining the purchase.
Within the overall Company Information allow user to set a threshold over which a single item purchase will be considered an asset (default value £300 for example)
When a bill is created or a purchase transaction is over this threshold, offer to create an asset entry from the information provided, allowing the user full customisation of the asset entry details. Repeat until transaction value less total value of registered assets (from the transaction) is < than the threshold.
May need to credit the account that the entire transaction was explained to with the value of the newly created assets to avoid skewing the current year's P & L figures.
And/Or allow user to manually create Asset entries, but instead of creating a manual bank entry (as currently) use (new) asset registration page, allowing user to associate it with a (previously uploaded) bank account entry (use date of purchase on asset entry to limit bank account entries on pick list?)
I’m confident you'll work it out!
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Inappropriate?To throw a further spanner into the works, what if the asset(s) purchased were discounted in some way - goodwill discount, quantity, promotional offer, freebie with other purchase etc
Not sure on the answer to this one (accountants anyone???) but in this case would the value of an asset be the value paid (after discounts etc as above), but the retail price before discount et al/theoretical selling price
I’m still confident
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Inappropriate?Hello Olly.
You could, in fact, work round this problem by splitting the bill up and entering it as several different bills?
So for example, if you had a bill for £2,000 of which £500 was one asset (e.g. your camera), £1,000 was another asset (e.g. your lights) and £500 was consumable items like cables and so forth, instead of entering one bill for £2,000 you'd enter three.
One for £500 and categorise it as Purchase of Capital Asset and put in the description that this was the camera, then a second for £1,000 again a Purchase of Capital Asset described as the lights, then a third bill for £500 and explain as something like Computer Hardware or Office Equipment (both of these are P&L codes in FreeAgent, and that, as you've correctly identified, is where consumable items like cables go).
Then, when you pay the bill, you would need to divide the bank transaction up too, into three different Bill Payments each for the correct amount (please do ask if you need a note of how to do this).
And there you would have it - multiple assets and consumable items from the same bill.
Discounts are a whole other accounting issue again! But I've checked the accounting standard that applies to fixed assets and it states that you need to use the post-discount price for the cost of the asset.
Does that help, please?
Kind regards,
Emily -
Inappropriate?This is what I thought would have to be done for now, however it is a bit messy and doesn't reflect reality - only one bill is being paid, not 5 or so.
It will do for now, but it would be nice in future to see FAC hold a more fully fledged Asset Register - the creation and initial population of each Asset entry triggered by a bank account entry/bill payment. but not fully dependent on that entry for the entire description of that Asset through it's life within the Register.
I’m not liking workarounds
EMPLOYEE
