I would like to please ask/confirm how to record End of Financial Year transactions for Motor Vehicles and Tools.
Motor Vehicles
Currently under Assets we have a £ value against Motor Vehicles. At EOY my accountant works out how much is the depreciation calue and tells me that at the start of the new year they are worth X amount.
Would recording this be similar to selling an asset where it would be the depreciation amount From Motor Vehicles and To Depreciation or Loss on Sale? Except I am not selling it so could I create a new expense just called EOY Depreciation?
Tools
Similar query, I have an opening balance on the Tools and even though I record the all tool purchases as Assets rather than expenses, as they are heavily used, alot dont make it to the end of the year so I need a closing balance to £X less.
Would this be recorded as From Tools and Equipment (Asset) to Cost of Goods Sold (Expense)?
Thanks very much,
Kim.
Hi Kim,
For Motor Vehicles:
Yes, this is the same as recording a loss on the sale of the motor vehicles - create a General Transaction from the "Motor Vehicles" asset account to the "Depreciation or Loss on Sale" expense account. This expense account can be used for both loss-on-sale AND end-of-year depreciation (or you can create a separate depreciation expense account if you prefer).
For Tools:
I would not use the 'Cost of Goods Sold' - this is really for tracking purchases of stock which you sell to customers. You could use the depreciation expense account (ie. same expense as for motor vechicle depreciation) or create a new expense account - I recommend you check with your accountant on this.
By the way, we're happy to give your accountant a free copy of Solar Accounts to make it easier to view your accounts - please ask him/her to contact me if desired.
Cheers,
