Fixed Assets versus Office Expense

You should add up the cost of all the parts you buy, the sum is the
total spent or the cost of the computer.  You set it up then just like
you purchased a whole unit from a vendor.  Then you can depreciate it.

The IRS has all kinds of booklets on fixed assets and how they want to
see them listed, life spans, etc.  Your tax preparer may have
information as well or your CPA.


Mark D. Lincoln wrote:

All,

Well, I received a reply from my accountant which is as follows:

"...it would end up as a fixed asset... I would accumulate all of the part
costs in a temporary account and then transfer the total to the fixed asset
account..."

So, based on this recommendation, can someone please explain how I might do
this in QuickBooks 2004.  My accountant does not use QuickBooks, so she is
unable to help me.

Thanks...

Mark

You could create an account called suspense, accrue the costs into it,
then with a journal entry move the final total cost to fixed assets.



Mark D. Lincoln wrote:

It's fairly common practice to use a Current Asset account called
something like "work in process".



so she is

What type of account is the "suspense" account?  Can you give me the steps
in QuickBooks to do this?

Mark

Mark D. Lincoln wrote:

Create an account. Call it "Suspense" (or "Parsnip" or "Huffalump." Doesn't
matter.)
Buy a part: Credit "Checking" Debit "Suspense"
Buy another part. Do the same.
...
Finally, Credit "Suspense" for the total in the account and Debit the
appropriate asset account.

A "Suspense" account is a temporary holding area used to make double-entry
accounting work.

PART II.
You have other problems, though. I suggest:

1. Take a community college or Learning Annex course on Quick Books AND
basic bookkeeping.
2. Find an accountant who DOES use QB. These accountants have a
sooper-dooper program that analyzes a QB backup file to produce all your tax
forms and end-of-year entries.
3. Better than an accountant who uses QB, much better, is a tax attorney who
uses QB.

PART III.
For a computer, I wouldn't fool with depreciation. I'd expense the whole
thing.

I would not label the account Suspense, perhaps a Fixed Asset account called
Build in Progress would be more appropriate.

Also your accountant does not have to know Quickbooks to advise you to make
a journal entry or what accounts to set up. Her answer would be the same no
matter what program you used.

"Mark D. Lincoln" wrote:


Open chart of accounts, pick new account.  Name, you'll think of something
better than suspense.  Type of account, it really is an asset account, but if
you make it a bank account you'll find it more flexible in the long run.
Eventually you'll find another use for this account such as a customer who is
also a vendor and you just offset their bill and your invoice - barter
exchange.

The other way to do this, is go back to the original purchases of the parts
that make up the computer and code them directly into the fixed asset
account.  I'm assuming you bought all the parts in a short period of time, if
something was bought in last year, you have a different problem, ask your CPA.

Yes, that's what I would do, and twice per year, June 30 and Dec 31.


--
Stephanie Wells, AICIA
Partner, Durham Business Outsource
Accounting & Technology
www.dbo.ca
smwells <at> dbo <dot> ca