WPCA_M673

8.

FIXED ASSETS
Assets owned by your company deteriorate and lose their value over a financial year. This is depreciation and can be tracked through MYOB. In this session you will gain an overview of managing fi!ed assets learn how to add a new asset to MYOB learn how to adjust historical balancing learn how to allocate depreciation for an asset learn how to make loan repayments on an asset learn how to create a recurring asset transaction.

By the end of this session you will know some important strategies for dealing with fi!ed assets.

8.1

Overview Of Fixed Assets

Your company will most likely need to purchase relatively e!pensive and fixed assets. These can include the furniture in the office" the e#uipment in the factory" the motor vehicles driven by the sales people" and even the building in which the business is housed. $hile the ta! office does not allow you to write the e!pense of these assets off in a full year" it does allow you to write off a depreciation amount. This depreciation amount is an attempt at applying a monetary value to the wear and tear and loss of resale value of an asset item within the current year. %i!ed assets" because of their nature" are usually relatively e!pensive to purchase. They are often purchased with a loan or through a lease which re#uires periodic and regular repayment. All of these factors make asset management within MYOB a challenge. %or the rest of this session you will help %red Bloggs account for a new item of e#uipment that he has ac#uired. %red has had the opportunity of purchasing a new Turbo-generator machine. This machine allows you to refurbish white goods & you place the defective or old item in the Turbo-generator" flick the switch" and within the minutes the item comes out at the other end completely rebuilt" repainted" and refurbished. 'erfect for %red(s business and too good an opportunity to miss)

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The Turbo-generator costs *+,"-... %red doesn(t want to pay cash for this as this will impinge upon his cash flow. As a conse#uence he has taken out a loan with /oan0hark %inancials for *+,"-.. over , years. The monthly repayments are *12+.2,. %red has discussed the purchase with his accountant. 3is accountant has told him that the item can be depreciated by +.4 per year. This is *5."67. per year" or *11, per month.

8.2

Adding A New Asset

The first task is to add the new item as an asset in the company accounts. The asset will be added as a fixed asset account. There will most likely already be asset accounts. You can therefore add the item to these e!isting accounts or create new ones. In %red(s chart of accounts there are no asset accounts for plant and e#uipment. 0o the first thing that we will do is to add a new header account for Plant and Equipment. $e can then add detail accounts for the actual items themselves. The most accepted way of dealing with a capital asset is to include an account that represents the value of the item at cost" and to add a depreciation value account that reflects the accrued depreciation on the item. The at cost account will contain a positive amount" while the accrued depreciation account will contain a negative amount & the amount lost from the assets cost since the original purchase. The two accounts added together will reflect the true current value of the asset.
Exercise 39: dding a !ew sset

Note

In this chapter you will need to use the data file called Extended " #ixed ssets$m%o. If MYOB has started use File" then Open and open this data file" or start MYOB and open Extended " #ixed ssets$m%o from the &elcome screen. 8lick on to display the ccounts command centre ccounts 'ist dialog

5. 7.

8lick on Acco nts !ist to display the bo!

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+. -.

8lick on the

sset tab to display the

sset accounts

0croll down the list and study the e!isting fi!ed assets We'll create a new one here...

,.

8lick on

to display the Edit ccounts dialog bo!

6. 9. 1. 2.

8lick on (eader

ccount to make this a header account

8lick in ccount !umber Type 28"" and press to e!pand the fields

Type #l$nt % E& ip'ent in ccount !ame

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5.. 8lick on to create the new account

Now we'll create a hierarchy for the new item of plant... 55. 8lick on again 57. 8omplete the details as shown to display the Edit ccounts dialog bo!

5+. 8lick on 5-. 8lick on again

to create the new account to display the Edit ccounts dialog bo!

5,. 8omplete the details as shown

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Fixed Assets

51. 8lick on

to create the new account

52. 8lick on

to close the

ccounts /ist

You have now complete thi! e"erci!e. :otice that we didn(t add an opening balance for the accrued depreciation. The value of this account will be regularly updated as we enter the periodic depreciations.

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8.(

Ad) sting T*e +istoric$l ,$l$ncing

'oor old MYOB is now distraught at what you have done. According to your activities you have purchased an item of plant which cost *+,"-... 3owever" MYOB doesn(t know where the money for the purchase came from. $as the item purchased for cash; $as a loan taken out; <id %red win Tattslotto; The balance sheet for Bloggs Appliance 8entre is therefore out by *+,"-... =ntil MYOB is told how the item was financed this amount will reside in the (istorical )alancing e#uity account & this is the purgatory account for naughty transactions that have neither gone to the left nor right side of the accounting ledger) If %red paid by che#ue this amount would come out of the che#ue account and the (istorical )alancing would be corrected. 3owever" %red has taken out a loan to pay for this e#uipment. A loan is a liability to the company. $e will resolve the historical balance by creating an offset liability account for the loan. As time moves on the regular periodic loan repayments will eventually wipe out the loan and all will be sweet.
Exercise *+: djusting t,e (istorical )alancing

5. 7. +.

>nsure that the

ccounts command centre appears ccounts 'ist dialog

8lick on Acco nts !ist to display the bo!

8lick on the Equit% tab and notice how (istorical )alancing shows -3./*++

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Fixed Assets
-. 8lick on the 'iabilit% tab and scroll down to 'ong Term 'iabilities We'll create a loan account here for the tur#o $enerator... ,. 6. 8lick on to display the Edit ccounts dialog bo!

8omplete the details as shown

9.

8lick on

to create the new account

1.

8lick on

to close the

ccounts /ist

You have now complete thi! e"erci!e.

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8.-

Alloc$ting Depreci$tion
Make no mistake about it" MYOB does not calculate depreciation & you must do this yourself. 3owever" MYOB does allow you to track depreciation and to update the current real value of the asset. To do this you must enter the depreciation for the asset after you have calculated it. A common method of doing this is to use a ?ournal entry either on an annual basis or on a more regular basis. The ?ournal entry will need to debit a 0epreciation e!pense account" and credit the accrued depreciation asset account for the item. %red is a little fastidious and would like the ad?ustment to be made on a monthly basis.
Exercise *1: llocating 0epreciation

5. 7.

>nsure that the

ccounts command centre appears

8lick on .ecord /o rn$l Entr0 to display the 2ecord 3ournal Entr% dialog bo!

+. -. ,.

Type 211"12""2 in 0ate and press

to ?ump to 4emo

Type T r3ogener$tor depreci$tion 4 Oct 2""2 and press to ?ump to cct 5 'ress to display a list of accounts

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Fixed Assets
6. 9. 1. 2. 0croll down to and click on 1-676+ Turbogenerator " acc dep" then click on 'ress 'ress 'ress to ?ump to 8redit and type 882."" to ?ump to cct 5 on the second line

to display a list of accounts again ccounts

5.. Type 5 to ?ump to the Expense

55. 8lick on 9-13++ 0epreciation" then click on

57. 8lick on 5+. 8lick on Entr% dialog bo!

to record the transaction to close the :eneral 3ournal

%et'! !ee how thi! ha! chan$e the Chart of Account!... 5-. 8lick on Acco nts !ist to display the bo! 5,. 8lick on the sset tab ccounts 'ist dialog

56. 0croll down and e!amine the Plant ; Equipment accounts and notice how they have been ad?usted

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59. 8lick on

to close the

ccounts /ist

You have now complete thi! e"erci!e. If you will be creating ad?ustments on a regular basis consider setting the ?ournal entry up as a recurring journal.

8.2

6$7ing !o$n .ep$0'ents

Accounting for the asset is one thing & accounting for the payment of the asset is yet another. In our case study %red has borrowed *+,"-.. from /oan0hark %inancing. 3e is re#uired to repay the loan in monthly instalments of *12+.2,. This is done using the &rite 8,eques facility.
Exercise *6: 4aking 'oan 2epa%ments

5. 7. +.

8lick on

to display the 8ard #ile command centre

8lick on 8$rds !ist to display the 8ards 'ist dialog bo! 8lick on the <upplier tab" then click on

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-. ,. Type !o$nS*$r7 Fin$ncing in 8ompan% !ame and press to e!pand the rest of the fields 8omplete the remaining details as shown

6. 9.

8lick on 8lick on bo!

to record the changes to close the 8ards 'ist dialog

Now we can write a che&ue for the loan amount... 1. 2. 8lick on to display the )anking command centre

8lick on Spend 6one0 to display the <pend 4one% dialog bo! to ?ump to mount

5.. Type ("11"1"2 in 0ate and press 55. Type 89(.92 in mount and press

to ?ump to 8ard

57. Type ! to display the 'oan<,ark card details 5+. 8lick in 4emo 5-. Type !o$n .ep$0'ent 4 Oct 2""2 and press cct 5 5,. 'ress to see the accounts in a list to ?ump to

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56. Type 2 to display the 'iabilit% accounts 59. 0croll down to and click on 6-63++ Turbogenerator 'oan" then click on

51. 8lick on 52. 8lick on bo!

to record the che#ue to close the <pend 4one% dialog

You have now complete thi! e"erci!e.

8.5

A 8o'3ined And .ec rring Asset Tr$ns$ction

0ince the depreciation activity is performed monthly" and the loan repayment is performed monthly" and they are both regular and predictable" it makes sense to combine them into one transaction. It also makes sense to make that combined transaction a recurring transaction which can simply be plucked from a list on a monthly basis.
Exercise *3: 8reating a 2ecurring sset Transaction

5. 7.

8lick on

to display the )anking command centre

8lick on Spend 6one0 to display the <pend 4one% dialog bo!

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Fixed Assets
+. 8omplete the details as shown

-.

8lick on Template dialog bo!

to display the <ave 2ecurring

'ince the memo te"t which now appear! in Name ha! #een truncate ( we'll provi e a more meanin$ful name... ,. 6. Type T r3ogener$tor Tr$ns$ctions 8lick on to record the recurring template and return to the <pend 4one% dialog bo! We won't actually $enerate the tran!action! at thi! point...

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9. 8lick on bo! to close the <pend 4one% dialog

You have now complete thi! e"erci!e.

8.:

;sing A .ec rring Asset Tr$ns$ction

@ecurring transactions appear in lists and are very easy to use. $ith comple! transactions that re#uire careful allocation to accounts recurring transactions can save a great deal of time and significantly reduce errors.
Exercise **: =sing a 2ecurring Transaction

5. 7. +.

>nsure that the )anking command centre still appears 8lick on Spend 6one0 to display the <pend 4one% dialog bo! 8lick on to display the <elect a 2ecurring Transaction dialog bo!

-.

8lick on Turbogenerator Transactions and click on )he etail! will now appear in the 'pen Money ialo$ #o"...

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Fixed Assets

,. 6. 9.

Type 291111"2 in 0ate 8lick on 8lick on bo! to record the che#ue to close the <pend 4one% dialog

You have now complete thi! e"erci!e.

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8.8

Fixed Assets < ic7 .eference

To Add An Asset=
5. %rom the ccounts command centre" click on Acco nts !ist" and click on the Asset tab 7. 8reate a new at-cost account for the asset A show the purchase price of the asset as an opening balance in this account +. 8reate a new accumulated depreciation account for the asset -. 8lick on the 'iabilit% tab ,. 8reate a new loan account for the asset A show the purchase price of the asset as an opening balance in this account to offset the asset at-cost account

To 6$7e !o$n .ep$0'ents=

5. %rom the )anking command centre" click on Spend 6one0 7. >nter the date" the amount of the repayment" and the finance company Bor bankC +. >nter payment details in the memo -. 8hoose the loan liability account in cct5 ,. 8lick on >.ecord?

To 8re$te A 8o'3ined .ec rring Tr$ns$ction=

5. %rom the )anking command centre" click on Spend 6one0 7. >nter the date" the amount of the repayment" and the finance company Bor bankC +. >nter payment details in the memo -. 8hoose the loan liability account in cct5 and enter the loan repayment amount ,. 8hoose the accumulated depreciation asset account in the ne!t cct5 line and enter the depreciation amount as a negative value 6. 8hoose the depreciation e!pense account in the ne!t cct5 line and enter the depreciation amount 9. 8lick on >.ecord?

To Alloc$te Depreci$tion=
5. %rom the ccounts command centre" click on .ecord /o rn$l Entr0 7. >nter the date and the amount of the depreciation +. 8redit the accumulated depreciation a!!et account with the amount -. 0ebit the e"pen!e depreciation account Be.g. 9-13++C with the amount ,. 8lick on >.ecord?

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