Support Query
How to record Depreciable Assets when entering in Opening Balances?
Overview
There are two ways to record depreciable assets in Simple Fund 360:
- Record underlying assets as Cost Base Adjustments to the Property
- Record underlying assets under Fixtures & Fittings
The method used will affect how depreciation expense is to be posted in subsequent periods and how the amounts are displayed in Financial Reports.
Example
In this example, an Australian Residential Real Estate Property (Account 77200) was recorded as at 30/06/2022.
| Purchase Price |
$200,000 Contract Date: 30/06/2015 |
| Market Value | $300,000 as at 30/06/2022 |
For more information on how to record property when entering in Opening Balances, click here.
This property has an Air Conditioner (depreciable asset) installed as at 30/06/2022.
| Purchase Price |
$6000 |
| Purchase Date |
30/06/2015 |
| Depreciation Method |
Prime Cost Method |
| Depreciation Rate |
10% |
Option 1: Record underlying assets as Cost Base Adjustments to the Property
Under this method, depreciable assets will be recorded as a cost base adjustment, which will increase the accounting cost of the property (See Unrealised Capital Gains - Detailed Report and Investment Summary Report below)
|
Account Name |
Account Code |
Units |
DR(S) |
CR($) |
|
Investment Property |
77200/Property |
0 |
6000 |
|
|
Member Data Clearing Account |
94920 |
|
|
6000 |
Ensure you have to input "0" in the Units field and should not leave the field blank. Otherwise, this will be treated as a manual revaluation by Simple Fund 360. For more information on recording cost base adjustments, click here.
Select the parcel in the more details panel of the Investment Property, which will be the original purchase transaction for the property. For more information on recording the property upon entering Opening Balances, click here.
Once your Balancing entry has been entered, save the transactions by selecting Post.
Member Data Clearing Account (94920)
For Opening Balance purposes we have utilised Account 94920 - Member Data Clearing Account. However, when setting up a fund, other suspense accounts can be used. It is recommended to enter all components of the balance sheet against the same suspense account.
Under this method, prior year depreciation and accumulated depreciation can be recorded as manual journal entries. For more information, click here.
The depreciable assets can be recorded under the Depreciation Worksheet, to record depreciation expense for subsequent periods (See Below).
When recording the value of the depreciable asset at year end, using the cost-base adjustment method, the depreciable assets can be entered in the Property Worksheet (under the main property) for record-keeping purposes. No individual asset accounts will be created within the chart of accounts.
For more information on recording asset depreciation using the property worksheet, click here.
Regarding the above example, the air conditioner will be entered as per below:
Once depreciation has been posted for subsequent periods, the depreciation will be posted against the property account.
Whilst the Investment Reports, Detailed Operating Statement and Rental Property Statement will not show a breakdown of each individual asset and the respective depreciation within the worksheet, the Depreciation Schedule will display the depreciable assets listed under the property (See Below).
Option 2: Record underlying assets under Fixtures & Fittings
Under this method, depreciable assets will be recorded as separate items, which will be displayed on the Investment Summary, Detailed Statement of Financial Position, and Unrealised Capital Gains – Detailed Report (See Below).
| From the Main Toolbar, go to Accounting. |  |
| Select Chart of Accounts from the list. |  |
Click Add Account and select Investment.
Ensure the following details are added:
- Securities: A security representing the underlying asset.
This security may need to be created, please refer to How to add a Security - Investment Type: Fixtures and Fittings (at written down value) - Unitised
Select More Details >> and ensure depreciable asset is ticked.
Click Save.
After the account has been added to the fund, ensure that:
- A price has been added for the Depreciable Asset: Manually Revaluing Security Prices
- Link the depreciable asset to the property. Click here for more information.
- A purchase is recorded for the security with the following transaction:
|
Account Name |
Account Code |
Units |
DR(S) |
CR($) |
|
Air Conditioner |
72650/Asset |
1 |
6000 |
|
|
Member Data Clearing Account |
94920 |
|
|
6000 |
Ensure the correct contract date is entered in the more details panel of the Depreciable Asset.
The contract date must be entered in to provide accuracy of your reports and calculations for further processing. If the contract date has not been entered, when you dispose of the investment in the future, Simple Fund 360 will not be able to recognise the original cost base and will therefore calculate incorrect capital gains.
Once your Balancing entry has been entered, save the transactions by selecting Post.
Member Data Clearing Account (94920)
For Opening Balance purposes we have utilised Account 94920 - Member Data Clearing Account. However, when setting up a fund, other suspense accounts can be used. It is recommended to enter all components of the balance sheet against the same suspense account.
When recording the value of the depreciable asset as separate line items, the existing depreciable assets can be entered in the Depreciation Schedule.
For more information on using recording depreciation for existing assets, click here.
Regarding the above example, the air conditioner will be entered as per below:
Once depreciation has been posted for subsequent periods, the depreciation will be posted against the depreciable asset.
The Investment Reports, Detailed Operating Statement, Rental Property Statement and Depreciation Schedule will show a breakdown of each individual asset and the respective depreciation within the worksheet, (See Below).
See Also: