Fixed Assets versus Office Expense

All,

I am building a new computer from individual parts (case, power supply, motherboard, processor, hard drive, dvd-rom, dvd-rw, floppy drive, video card, processor cooler, etc.) and am wondering how to post these items in QuickBooks. Typically, if I purchase a complete computer from a vendor like Dell, it becomes a fixed asset of the company and I depreciate the expense. For a computer constructed from individual parts, are the individual parts fixed assets that should be depreciated, or are they office expenses? In addition, if I declare them as fixed assets, I have to pay a tangible property tax to the county where my business is located. Finally, is there someplace I can find the rules on fixed assets versus expenses that will help me make this decision in the future? Thanks...

Mark

Reply to
Mark D. Lincoln
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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. L> All,

Reply to
none

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

Reply to
Mark D. Lincoln

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. L> All,

Reply to
none

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

Reply to
!-!

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

Mark

Reply to
Mark D. Lincoln

PART I. 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.

Reply to
HeyBub

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.

Reply to
Allan Martin

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.

Reply to
Golden California Girls

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

Reply to
S.M.Serba

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