Difference between revisions of "How do I deal with fixed asset purchases?"
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== Summary == | == Summary == | ||
This article explains how to deal with fixed asset purchases. | This article explains how to deal with fixed asset purchases. | ||
| + | |||
| + | If you need assistance on which figures to post and where to post them to please speak to your accountant for advice. | ||
== More Information == | == More Information == | ||
| − | There are a number of factors that will affect how you handle fixed asset purchases. | + | There are a number of factors that will affect how you handle fixed asset purchases. |
| + | |||
| + | # Is the asset purely for business use? | ||
| + | # Is there any V.A.T. involved and can you claim it back? | ||
| + | # Have you paid cash for it or is it on finance? | ||
| + | # Did you actually manage to extract an invoice out of the supplier? | ||
| − | + | In general terms, you should have an invoice for the asset purchased under almost any circumstances, but you may not be able to claim the V.A.T back. The main instance of this involves company cars - if they are not purely for business use, then no V.A.T. can be claimed on the purchase. With most other asset classes, you should be able to claim back any V.A.T. involved. | |
| − | |||
| − | |||
| − | |||
| − | + | === Purchases of Assets other than cars === | |
| + | Go to {{Menu|{{PL}}|Purchase Ledger Postings}}. | ||
| + | * Post the invoice following the normal process in [[Posting purchase invoices|this]] article with one small variation. | ||
| + | ** At the {{DataPrompt|Centre}}, search for the Purchase Centre code for the addition of the appropriate class of fixed asset. If it does not exist, then create it following [[How do I create a sales or purchase centre?|this]] article. You should find a nominal code for the addition of each class of fixed asset if you are using the Platinum standard nominal codes. | ||
| + | * This gets the invoice onto the system. | ||
| − | == Purchases of | + | === Purchases of Company Cars === |
| − | + | The difference with company cars is that in most instances you cannot reclaim the V.A.T. on the unit purchase. You should check with your accountant if you are in any doubt as to whether you can claim back the V.A.T. on the unit in question. | |
| − | + | If you can claim back the V.A.T., then simply follow the same routine as above. | |
| − | + | If you cannot claim back the V.A.T., then it is easier to journal the information using the {{NL}}. | |
| − | |||
| − | == | + | === Payment === |
| − | + | Assets can be financed in a number of different ways. You can pay for them outright if your cash flow or capital availability allows; you can finance them with a loan from your bank; you can finance them using hire purchase or lease purchase. | |
| − | |||
| − | |||
| − | + | If you pay for them outright, then this can be done either by posting a payment into the {{PL}} or as part of the nominal journal. | |
| − | |||
| − | If you | + | If you are taking out finance for the purchase, either hire or lease purchase, then the payment through the {{PL}} should not come from the bank account, but should go to a new balance sheet liability code representing the total amount financed and still owing. This forms the capital of the loan. |
| + | If you are posting the nominal journal, then again this can be incorporated as part of that posting. | ||
| − | + | The monthly repayments should then be posted using a journal. The capital amount should reduce the balance on the liability code whilst the interest or fees should be posted to your Profit & Loss. | |
| − | |||
| − | This is not a simple subject to cover, | + | This is not a simple subject to cover, so you are advised to seek guidance from your accountant as to how to proceed. |
== See also == | == See also == | ||
| − | * [[Posting | + | * [[Posting purchase invoices]] |
| − | * [[How do I | + | * [[How do I create a sales or purchase centre?]] |
| − | * [[How do I | + | * [[How do I create a nominal code?]] |
| − | {{KB_Tags| fixed asset, asset, purchase, | + | {{KB_Tags|fixed asset, asset, purchase, purchase centre, invoice, payment, hp, hire purchase, vehicle}} |
| − | {{KB_PL}} {{ZN_Accounts}} | + | {{How}}{{KB_PL}}{{ZN_Accounts}} |
Latest revision as of 12:34, 19 June 2020
Contents
Summary
This article explains how to deal with fixed asset purchases.
If you need assistance on which figures to post and where to post them to please speak to your accountant for advice.
More Information
There are a number of factors that will affect how you handle fixed asset purchases.
- Is the asset purely for business use?
- Is there any V.A.T. involved and can you claim it back?
- Have you paid cash for it or is it on finance?
- Did you actually manage to extract an invoice out of the supplier?
In general terms, you should have an invoice for the asset purchased under almost any circumstances, but you may not be able to claim the V.A.T back. The main instance of this involves company cars - if they are not purely for business use, then no V.A.T. can be claimed on the purchase. With most other asset classes, you should be able to claim back any V.A.T. involved.
Purchases of Assets other than cars
Go to " Purchase Ledger Purchase Ledger Postings".
- Post the invoice following the normal process in this article with one small variation.
- At the "Centre", search for the Purchase Centre code for the addition of the appropriate class of fixed asset. If it does not exist, then create it following this article. You should find a nominal code for the addition of each class of fixed asset if you are using the Platinum standard nominal codes.
- This gets the invoice onto the system.
Purchases of Company Cars
The difference with company cars is that in most instances you cannot reclaim the V.A.T. on the unit purchase. You should check with your accountant if you are in any doubt as to whether you can claim back the V.A.T. on the unit in question. If you can claim back the V.A.T., then simply follow the same routine as above. If you cannot claim back the V.A.T., then it is easier to journal the information using the Nominal Ledger.
Payment
Assets can be financed in a number of different ways. You can pay for them outright if your cash flow or capital availability allows; you can finance them with a loan from your bank; you can finance them using hire purchase or lease purchase.
If you pay for them outright, then this can be done either by posting a payment into the Purchase Ledger or as part of the nominal journal.
If you are taking out finance for the purchase, either hire or lease purchase, then the payment through the Purchase Ledger should not come from the bank account, but should go to a new balance sheet liability code representing the total amount financed and still owing. This forms the capital of the loan. If you are posting the nominal journal, then again this can be incorporated as part of that posting.
The monthly repayments should then be posted using a journal. The capital amount should reduce the balance on the liability code whilst the interest or fees should be posted to your Profit & Loss.
This is not a simple subject to cover, so you are advised to seek guidance from your accountant as to how to proceed.
See also
- Posting purchase invoices
- How do I create a sales or purchase centre?
- How do I create a nominal code?
