You are viewing a plain text version of this content. The canonical link for it is here.
Posted to dev@ofbiz.apache.org by Si Chen <si...@opensourcestrategies.com> on 2006/12/02 00:51:03 UTC
Re: Purchasing Fixed Assets
David,
I think what should happen is this:
When any fixed asset is created, if we know the ownerPartyId, then we
can create:
Debit Fixed Asset (or a specific FixedAsset GL account)
Credit Uninvoiced Fixed Asset Receipt
Then, when you have a purchase invoice with a fixed asset item
created, you can do this:
Debit Uninvoiced Fixed Asset Receipt
Credit a Payable of some kind--Accounts Payable? I'm not sure -
often fixed assets are bought with loans.
Then we'd have to think about doing the depreciation calculations,
that's what I think could be complicated.
Best Regards,
Si
sichen@opensourcestrategies.com
Re: Purchasing Fixed Assets
Posted by Chris Howe <cj...@yahoo.com>.
How is what I'm saying incorrect? An invoice is
evidence of an economic event, it is not itself an
economic event.
--- Si Chen <si...@opensourcestrategies.com> wrote:
> Chris,
>
> Just for the record, I don't think what you're
> saying is correct.
>
> On Dec 4, 2006, at 10:27 AM, Chris Howe wrote:
>
> > Not to call your accountant out, but WOW!
> >
> > If the transfer of ownership of the fixed asset
> > occurred when the setup services were performed,
> there
> > is only ONE economic event that is occurring and
> > should be recorded as such:
> >
> > Dr Fixed Assets - $1,000,000
> > Dr Shipping Expense - $50,000
> > Dr Professional Services expense (or something
> > similar) - $150,000
> > Cr Accounts Payable $1,200,000
> >
> > However, if the transfer of ownership of the fixed
> > asset occurred when the item was shipped, and then
> at
> > a later date the item was setup, then there are
> TWO
> > economic events.
> >
> > Dr Fixed Assets - $1,000,000
> > Dr Shipping Expense - $50,000
> > Cr Accounts Payable - $1,050,000
> >
> > Dr Professional Services expense (or something
> > similar) - $150,000
> > Cr Accounts Payable - $150,000
> >
> > An invoice is a request for payment. Stop making
> it
> > out to be something that it is not. A company's
> > account of their assets and liabilities has
> changed
> > regardless of whether a request for payment has
> been
> > made. Their assets and liabilities do not change
> > because a request has been made (or an even more
> > absurd assertion, that the request has been
> received).
> > This is why we have separate entities for
> invoices
> > and gL. Please use the correct entities.
>
> Best Regards,
>
> Si
> sichen@opensourcestrategies.com
>
>
>
>
Re: Purchasing Fixed Assets
Posted by Chris Howe <cj...@yahoo.com>.
Si, others,
If I cannot convince you that an "Uninvoiced Fixed
Asset Receipt" (UFAR) account is flat wrong, perhaps I
can at least sway your opinion that the approach is
not desirable; or that it causes more problems than it
solves.
First, I'm going by the assumption that UFAR is a
sub-account to Accounts Payable (AP). If my
assumption is incorrect, you are understating your
liabilities.
1) So, if UFAR is a sub-account of AP, then the
journal entry:
Dr: UFAR - $1,000,000
Cr: AP - $1,000,000
is redundant.
This redundancy causes a problem in the event of an
audit (internal or external). The transaction that
debits UFAR has evidence by way of invoice. However,
the transaction that credited UFAR has no evidence to
support the transaction occurring (as this usage is
unorthodox to say the least, the invoice may actually
instead be evidence of the transaction that credited
UFAR, or may not be sufficient as evidence of either
transaction. But certainly, the invoice is cannot be
evidence for both). This lack of evidence provides
ample opportunity for someone to defraud a company.
2) Being two seperate transactions that deal with
monetary numbers, how do you reconcile the following
scenario?
Purchase a fixed asset for what you believed to be
$1,000,000
Dr: Fixed Assets - $1,000,000
Cr: UFAR - $1,000,000
Invoice shows up with the cost of the asset being
$950,000.
Dr: UFAR - $950,000
Cr: AP - $950,000
UFAR has a remaining balance of $50,000
The correct journal entry for a misunderstanding of
price is:
Dr: AP - $50,000
Cr: Fixed Asset - $50,000
The sanest possible journal entry in a UFAR world
would instead be:
Dr: UFAR - $1,000,000
Cr: Fixed Asset - $ 50,000
Cr: AP - $ 950,000
If all you're ever going to do is debit UFAR the same
amount that you previously credited it, there is no
point in maintaining it; it provides no additional
information to decision makers above and beyond
providing a status Id to the projected invoice.
Which, can be accomplished much easier by simply
providing a status id to the projected invoice.
Re: Purchasing Fixed Assets
Posted by Si Chen <si...@opensourcestrategies.com>.
Chris,
Just for the record, I don't think what you're saying is correct.
On Dec 4, 2006, at 10:27 AM, Chris Howe wrote:
> Not to call your accountant out, but WOW!
>
> If the transfer of ownership of the fixed asset
> occurred when the setup services were performed, there
> is only ONE economic event that is occurring and
> should be recorded as such:
>
> Dr Fixed Assets - $1,000,000
> Dr Shipping Expense - $50,000
> Dr Professional Services expense (or something
> similar) - $150,000
> Cr Accounts Payable $1,200,000
>
> However, if the transfer of ownership of the fixed
> asset occurred when the item was shipped, and then at
> a later date the item was setup, then there are TWO
> economic events.
>
> Dr Fixed Assets - $1,000,000
> Dr Shipping Expense - $50,000
> Cr Accounts Payable - $1,050,000
>
> Dr Professional Services expense (or something
> similar) - $150,000
> Cr Accounts Payable - $150,000
>
> An invoice is a request for payment. Stop making it
> out to be something that it is not. A company's
> account of their assets and liabilities has changed
> regardless of whether a request for payment has been
> made. Their assets and liabilities do not change
> because a request has been made (or an even more
> absurd assertion, that the request has been received).
> This is why we have separate entities for invoices
> and gL. Please use the correct entities.
Best Regards,
Si
sichen@opensourcestrategies.com
Re: Purchasing Fixed Assets
Posted by Chris Howe <cj...@yahoo.com>.
Not to call your accountant out, but WOW!
If the transfer of ownership of the fixed asset
occurred when the setup services were performed, there
is only ONE economic event that is occurring and
should be recorded as such:
Dr Fixed Assets - $1,000,000
Dr Shipping Expense - $50,000
Dr Professional Services expense (or something
similar) - $150,000
Cr Accounts Payable $1,200,000
However, if the transfer of ownership of the fixed
asset occurred when the item was shipped, and then at
a later date the item was setup, then there are TWO
economic events.
Dr Fixed Assets - $1,000,000
Dr Shipping Expense - $50,000
Cr Accounts Payable - $1,050,000
Dr Professional Services expense (or something
similar) - $150,000
Cr Accounts Payable - $150,000
An invoice is a request for payment. Stop making it
out to be something that it is not. A company's
account of their assets and liabilities has changed
regardless of whether a request for payment has been
made. Their assets and liabilities do not change
because a request has been made (or an even more
absurd assertion, that the request has been received).
This is why we have separate entities for invoices
and gL. Please use the correct entities.
** Disclaimer: I am not an accountant and should not
be construed as specific accounting advice. Even
though I do hold an MBA, please do your own diligence.
--- Adrian Crum <ad...@hlmksw.com> wrote:
> Our accountant just reviewed this email and he said
> it looks good to him.
>
>
> Si Chen wrote:
> > David,
> >
> > Invoices are definitely economic events, I agree.
> >
> > Here's the rationale for the "Uninvoiced Fixed
> Asset Receipt," and it
> > is similar to the reasonable for the "Uninvoiced
> Item Receipt": it is
> > to decouple of the value of the receipt or
> creation of a fixed asset
> > from accounts payable invoices. To wit, you can
> have these scenarios
> > which this account would solve better:
> >
> > 1. You buy a fixed asset worth $1 million, but
> the vendor's invoice
> > also includes $50,000 of shipping and $150,000 for
> set up. So you can
> > do this:
> >
> > DR Fixed Asset $1 million
> > CR Uninvoiced Fixed Asset Receipt $1 million
> >
> > DR Uninvoiced Fixed Asset Receipt $1 million
> > DR Shipping $50,000
> > DR Setup $150,000
> > CR Accounts Payable $1.2 million
> >
> > 2. You manufactured a fixed asset worth $1
> million in house, so you
> > can do this
> >
> > DR Fixed Asset $1 million
> > CR Uninvoiced Fixed Asset Receipt $1 million
> >
> > DR Uninvoiced Fixed Asset Receipt $1 million
> > CR WIP Inventory, Labor, expenses, etc. $1
> million
> >
> > You can imagine there are some other scenarios
> where this would apply.
> >
> > On Dec 3, 2006, at 1:00 AM, David E Jones wrote:
> >
> >>
> >> Hmmm... invoice are _definitely_ "economic
> events", or artifacts that
> >> have a direct financial impact on a company and
> therefore when
> >> finalized cause GL entries to be posted. That's
> the normal way of
> >> doing things. An order is received and there is
> generally no GL entry
> >> at that point. There are GL entries needed during
> fulfillment
> >> (inventory issuance), invoicing, receiving
> payments, etc.
> >>
> >> Maybe this isn't what you meant though. I agree
> that Si's use of a
> >> "Uninvoiced Fixed Asset Receipt" account seems a
> little funny. When a
> >> Fixed Asset is received you would get an invoice
> along with it from
> >> the vendor so it would be an unpaid invoice, or
> payables entry.
> >>
> >> -David
> >>
> >>
> >> On Dec 1, 2006, at 5:21 PM, Chris Howe wrote:
> >>
> >>> I know you want to want to link all of these
> into
> >>> automated actionable steps that make sense to
> your
> >>> business processes but you must remember:
> >>>
> >>> General Ledger entries are ONLY for economic
> events.
> >>>
> >>> Receipt of an invoice is NOT an economic event.
> If
> >>> you receive a fixed asset you:
> >>>
> >>> Debit: Fixed Asset
> >>> Credit: Accounts Payable
> >>>
> >>> If you want to create a relationship between the
> fixed
> >>> asset and an invoice, great. If you want to
> create a
> >>> relationship between the invoice and a vendor's
> >>> account, great. If you want to create a
> relationship
> >>> between a general ledger entry and an invoice or
> a
> >>> fixed asset, great. But under no circumstance
> should
> >>> you record a non economic event in the general
> ledger.
> >>>
> >>>
> >>>
> >>> --- Si Chen <si...@opensourcestrategies.com>
> wrote:
> >>>
> >>>> David,
> >>>>
> >>>> I think what should happen is this:
> >>>>
> >>>> When any fixed asset is created, if we know the
> >>>> ownerPartyId, then we
> >>>> can create:
> >>>>
> >>>> Debit Fixed Asset (or a specific FixedAsset GL
> >>>> account)
> >>>> Credit Uninvoiced Fixed Asset Receipt
> >>>>
> >>>> Then, when you have a purchase invoice with a
> fixed
> >>>> asset item
> >>>> created, you can do this:
> >>>>
> >>>> Debit Uninvoiced Fixed Asset Receipt
> >>>> Credit a Payable of some kind--Accounts
> >>>> Payable? I'm not sure -
> >>>> often fixed assets are bought with loans.
> >>>>
> >>>> Then we'd have to think about doing the
> depreciation
> >>>> calculations,
> >>>> that's what I think could be complicated.
> >>>>
> >>>> Best Regards,
> >>>>
> >>>> Si
> >>>> sichen@opensourcestrategies.com
> >>>>
> >>>>
> >>>>
> >>>>
> >>>
> >
> > Best Regards,
> >
> > Si
> > sichen@opensourcestrategies.com
> >
> >
> >
> >
>
Re: Purchasing Fixed Assets
Posted by Adrian Crum <ad...@hlmksw.com>.
Our accountant just reviewed this email and he said it looks good to him.
Si Chen wrote:
> David,
>
> Invoices are definitely economic events, I agree.
>
> Here's the rationale for the "Uninvoiced Fixed Asset Receipt," and it
> is similar to the reasonable for the "Uninvoiced Item Receipt": it is
> to decouple of the value of the receipt or creation of a fixed asset
> from accounts payable invoices. To wit, you can have these scenarios
> which this account would solve better:
>
> 1. You buy a fixed asset worth $1 million, but the vendor's invoice
> also includes $50,000 of shipping and $150,000 for set up. So you can
> do this:
>
> DR Fixed Asset $1 million
> CR Uninvoiced Fixed Asset Receipt $1 million
>
> DR Uninvoiced Fixed Asset Receipt $1 million
> DR Shipping $50,000
> DR Setup $150,000
> CR Accounts Payable $1.2 million
>
> 2. You manufactured a fixed asset worth $1 million in house, so you
> can do this
>
> DR Fixed Asset $1 million
> CR Uninvoiced Fixed Asset Receipt $1 million
>
> DR Uninvoiced Fixed Asset Receipt $1 million
> CR WIP Inventory, Labor, expenses, etc. $1 million
>
> You can imagine there are some other scenarios where this would apply.
>
> On Dec 3, 2006, at 1:00 AM, David E Jones wrote:
>
>>
>> Hmmm... invoice are _definitely_ "economic events", or artifacts that
>> have a direct financial impact on a company and therefore when
>> finalized cause GL entries to be posted. That's the normal way of
>> doing things. An order is received and there is generally no GL entry
>> at that point. There are GL entries needed during fulfillment
>> (inventory issuance), invoicing, receiving payments, etc.
>>
>> Maybe this isn't what you meant though. I agree that Si's use of a
>> "Uninvoiced Fixed Asset Receipt" account seems a little funny. When a
>> Fixed Asset is received you would get an invoice along with it from
>> the vendor so it would be an unpaid invoice, or payables entry.
>>
>> -David
>>
>>
>> On Dec 1, 2006, at 5:21 PM, Chris Howe wrote:
>>
>>> I know you want to want to link all of these into
>>> automated actionable steps that make sense to your
>>> business processes but you must remember:
>>>
>>> General Ledger entries are ONLY for economic events.
>>>
>>> Receipt of an invoice is NOT an economic event. If
>>> you receive a fixed asset you:
>>>
>>> Debit: Fixed Asset
>>> Credit: Accounts Payable
>>>
>>> If you want to create a relationship between the fixed
>>> asset and an invoice, great. If you want to create a
>>> relationship between the invoice and a vendor's
>>> account, great. If you want to create a relationship
>>> between a general ledger entry and an invoice or a
>>> fixed asset, great. But under no circumstance should
>>> you record a non economic event in the general ledger.
>>>
>>>
>>>
>>> --- Si Chen <si...@opensourcestrategies.com> wrote:
>>>
>>>> David,
>>>>
>>>> I think what should happen is this:
>>>>
>>>> When any fixed asset is created, if we know the
>>>> ownerPartyId, then we
>>>> can create:
>>>>
>>>> Debit Fixed Asset (or a specific FixedAsset GL
>>>> account)
>>>> Credit Uninvoiced Fixed Asset Receipt
>>>>
>>>> Then, when you have a purchase invoice with a fixed
>>>> asset item
>>>> created, you can do this:
>>>>
>>>> Debit Uninvoiced Fixed Asset Receipt
>>>> Credit a Payable of some kind--Accounts
>>>> Payable? I'm not sure -
>>>> often fixed assets are bought with loans.
>>>>
>>>> Then we'd have to think about doing the depreciation
>>>> calculations,
>>>> that's what I think could be complicated.
>>>>
>>>> Best Regards,
>>>>
>>>> Si
>>>> sichen@opensourcestrategies.com
>>>>
>>>>
>>>>
>>>>
>>>
>
> Best Regards,
>
> Si
> sichen@opensourcestrategies.com
>
>
>
>
Re: Purchasing Fixed Assets
Posted by David E Jones <jo...@undersunconsulting.com>.
I'm no accountant, but it sounds fine to me as an intermediate step
to make processes more flexible.
-David
On Dec 4, 2006, at 10:32 AM, Si Chen wrote:
> David,
>
> Invoices are definitely economic events, I agree.
>
> Here's the rationale for the "Uninvoiced Fixed Asset Receipt," and
> it is similar to the reasonable for the "Uninvoiced Item Receipt":
> it is to decouple of the value of the receipt or creation of a
> fixed asset from accounts payable invoices. To wit, you can have
> these scenarios which this account would solve better:
>
> 1. You buy a fixed asset worth $1 million, but the vendor's
> invoice also includes $50,000 of shipping and $150,000 for set up.
> So you can do this:
>
> DR Fixed Asset $1 million
> CR Uninvoiced Fixed Asset Receipt $1 million
>
> DR Uninvoiced Fixed Asset Receipt $1 million
> DR Shipping $50,000
> DR Setup $150,000
> CR Accounts Payable $1.2 million
>
> 2. You manufactured a fixed asset worth $1 million in house, so
> you can do this
>
> DR Fixed Asset $1 million
> CR Uninvoiced Fixed Asset Receipt $1 million
>
> DR Uninvoiced Fixed Asset Receipt $1 million
> CR WIP Inventory, Labor, expenses, etc. $1 million
>
> You can imagine there are some other scenarios where this would apply.
>
> On Dec 3, 2006, at 1:00 AM, David E Jones wrote:
>
>>
>> Hmmm... invoice are _definitely_ "economic events", or artifacts
>> that have a direct financial impact on a company and therefore
>> when finalized cause GL entries to be posted. That's the normal
>> way of doing things. An order is received and there is generally
>> no GL entry at that point. There are GL entries needed during
>> fulfillment (inventory issuance), invoicing, receiving payments, etc.
>>
>> Maybe this isn't what you meant though. I agree that Si's use of a
>> "Uninvoiced Fixed Asset Receipt" account seems a little funny.
>> When a Fixed Asset is received you would get an invoice along with
>> it from the vendor so it would be an unpaid invoice, or payables
>> entry.
>>
>> -David
>>
>>
>> On Dec 1, 2006, at 5:21 PM, Chris Howe wrote:
>>
>>> I know you want to want to link all of these into
>>> automated actionable steps that make sense to your
>>> business processes but you must remember:
>>>
>>> General Ledger entries are ONLY for economic events.
>>>
>>> Receipt of an invoice is NOT an economic event. If
>>> you receive a fixed asset you:
>>>
>>> Debit: Fixed Asset
>>> Credit: Accounts Payable
>>>
>>> If you want to create a relationship between the fixed
>>> asset and an invoice, great. If you want to create a
>>> relationship between the invoice and a vendor's
>>> account, great. If you want to create a relationship
>>> between a general ledger entry and an invoice or a
>>> fixed asset, great. But under no circumstance should
>>> you record a non economic event in the general ledger.
>>>
>>>
>>>
>>> --- Si Chen <si...@opensourcestrategies.com> wrote:
>>>
>>>> David,
>>>>
>>>> I think what should happen is this:
>>>>
>>>> When any fixed asset is created, if we know the
>>>> ownerPartyId, then we
>>>> can create:
>>>>
>>>> Debit Fixed Asset (or a specific FixedAsset GL
>>>> account)
>>>> Credit Uninvoiced Fixed Asset Receipt
>>>>
>>>> Then, when you have a purchase invoice with a fixed
>>>> asset item
>>>> created, you can do this:
>>>>
>>>> Debit Uninvoiced Fixed Asset Receipt
>>>> Credit a Payable of some kind--Accounts
>>>> Payable? I'm not sure -
>>>> often fixed assets are bought with loans.
>>>>
>>>> Then we'd have to think about doing the depreciation
>>>> calculations,
>>>> that's what I think could be complicated.
>>>>
>>>> Best Regards,
>>>>
>>>> Si
>>>> sichen@opensourcestrategies.com
>>>>
>>>>
>>>>
>>>>
>>>
>
> Best Regards,
>
> Si
> sichen@opensourcestrategies.com
>
>
>
Re: Purchasing Fixed Assets
Posted by Si Chen <si...@opensourcestrategies.com>.
David,
Invoices are definitely economic events, I agree.
Here's the rationale for the "Uninvoiced Fixed Asset Receipt," and it
is similar to the reasonable for the "Uninvoiced Item Receipt": it is
to decouple of the value of the receipt or creation of a fixed asset
from accounts payable invoices. To wit, you can have these scenarios
which this account would solve better:
1. You buy a fixed asset worth $1 million, but the vendor's invoice
also includes $50,000 of shipping and $150,000 for set up. So you
can do this:
DR Fixed Asset $1 million
CR Uninvoiced Fixed Asset Receipt $1 million
DR Uninvoiced Fixed Asset Receipt $1 million
DR Shipping $50,000
DR Setup $150,000
CR Accounts Payable $1.2 million
2. You manufactured a fixed asset worth $1 million in house, so you
can do this
DR Fixed Asset $1 million
CR Uninvoiced Fixed Asset Receipt $1 million
DR Uninvoiced Fixed Asset Receipt $1 million
CR WIP Inventory, Labor, expenses, etc. $1 million
You can imagine there are some other scenarios where this would apply.
On Dec 3, 2006, at 1:00 AM, David E Jones wrote:
>
> Hmmm... invoice are _definitely_ "economic events", or artifacts
> that have a direct financial impact on a company and therefore when
> finalized cause GL entries to be posted. That's the normal way of
> doing things. An order is received and there is generally no GL
> entry at that point. There are GL entries needed during fulfillment
> (inventory issuance), invoicing, receiving payments, etc.
>
> Maybe this isn't what you meant though. I agree that Si's use of a
> "Uninvoiced Fixed Asset Receipt" account seems a little funny. When
> a Fixed Asset is received you would get an invoice along with it
> from the vendor so it would be an unpaid invoice, or payables entry.
>
> -David
>
>
> On Dec 1, 2006, at 5:21 PM, Chris Howe wrote:
>
>> I know you want to want to link all of these into
>> automated actionable steps that make sense to your
>> business processes but you must remember:
>>
>> General Ledger entries are ONLY for economic events.
>>
>> Receipt of an invoice is NOT an economic event. If
>> you receive a fixed asset you:
>>
>> Debit: Fixed Asset
>> Credit: Accounts Payable
>>
>> If you want to create a relationship between the fixed
>> asset and an invoice, great. If you want to create a
>> relationship between the invoice and a vendor's
>> account, great. If you want to create a relationship
>> between a general ledger entry and an invoice or a
>> fixed asset, great. But under no circumstance should
>> you record a non economic event in the general ledger.
>>
>>
>>
>> --- Si Chen <si...@opensourcestrategies.com> wrote:
>>
>>> David,
>>>
>>> I think what should happen is this:
>>>
>>> When any fixed asset is created, if we know the
>>> ownerPartyId, then we
>>> can create:
>>>
>>> Debit Fixed Asset (or a specific FixedAsset GL
>>> account)
>>> Credit Uninvoiced Fixed Asset Receipt
>>>
>>> Then, when you have a purchase invoice with a fixed
>>> asset item
>>> created, you can do this:
>>>
>>> Debit Uninvoiced Fixed Asset Receipt
>>> Credit a Payable of some kind--Accounts
>>> Payable? I'm not sure -
>>> often fixed assets are bought with loans.
>>>
>>> Then we'd have to think about doing the depreciation
>>> calculations,
>>> that's what I think could be complicated.
>>>
>>> Best Regards,
>>>
>>> Si
>>> sichen@opensourcestrategies.com
>>>
>>>
>>>
>>>
>>
Best Regards,
Si
sichen@opensourcestrategies.com
Re: Purchasing Fixed Assets
Posted by Chris Howe <cj...@yahoo.com>.
The economic event is the transfer of ownership of
goods for obligation (accounts payable) or cash.
When they accepted ownership of the goods, they
accepted the asset. Additionally, when they accepted
the ownership of the goods, they accepted the
liability.
For simplicity, many small businesses hold off on
recording this economic event until receiving an
invoice. However, receipt of the invoice is not the
economic event. This practice is grossly incorrect
and may (will) cause major discrepancies in periodic
financial reports. A piece of paper summarizing the
transfer of ownership has no financial worth and
therefore cannot be an economic event.
There are two things (WHAT and WHEN[a])that are
important for a general ledger entry. And two
additional things (WHO and WHEN[b]) that are important
for auditing
WHAT - the economic event
WHEN[a] - date the economic event took place
WHO - who recorded the economic event
WHEN[b] - date the economic event was recorded
The distinction I am making is between WHAT the
economic event is and WHEN[b] someone chooses to
record it. WHEN[b] is not a part of the economic
event. These small differences are some of the
reasons why Accountants still get paid the big bucks
even in companies that have complete ERP packages.
The receipt of the order is not the economic event
either. The economic event depends on the terms of
shipping FOB shipping/FOB destination. The economic
event is the transfer of ownership, not the receipt of
goods. It is possible to contract in such a way to
make these simultaneously the same moment in time,
however generally they are not.
--- David E Jones <jo...@undersunconsulting.com>
wrote:
>
> Hmmm... invoice are _definitely_ "economic events",
> or artifacts that
> have a direct financial impact on a company and
> therefore when
> finalized cause GL entries to be posted. That's the
> normal way of
> doing things. An order is received and there is
> generally no GL entry
> at that point. There are GL entries needed during
> fulfillment
> (inventory issuance), invoicing, receiving payments,
> etc.
>
> Maybe this isn't what you meant though. I agree that
> Si's use of a
> "Uninvoiced Fixed Asset Receipt" account seems a
> little funny. When a
> Fixed Asset is received you would get an invoice
> along with it from
> the vendor so it would be an unpaid invoice, or
> payables entry.
>
> -David
>
>
> On Dec 1, 2006, at 5:21 PM, Chris Howe wrote:
>
> > I know you want to want to link all of these into
> > automated actionable steps that make sense to your
> > business processes but you must remember:
> >
> > General Ledger entries are ONLY for economic
> events.
> >
> > Receipt of an invoice is NOT an economic event.
> If
> > you receive a fixed asset you:
> >
> > Debit: Fixed Asset
> > Credit: Accounts Payable
> >
> > If you want to create a relationship between the
> fixed
> > asset and an invoice, great. If you want to
> create a
> > relationship between the invoice and a vendor's
> > account, great. If you want to create a
> relationship
> > between a general ledger entry and an invoice or a
> > fixed asset, great. But under no circumstance
> should
> > you record a non economic event in the general
> ledger.
> >
> >
> >
> > --- Si Chen <si...@opensourcestrategies.com>
> wrote:
> >
> >> David,
> >>
> >> I think what should happen is this:
> >>
> >> When any fixed asset is created, if we know the
> >> ownerPartyId, then we
> >> can create:
> >>
> >> Debit Fixed Asset (or a specific FixedAsset GL
> >> account)
> >> Credit Uninvoiced Fixed Asset Receipt
> >>
> >> Then, when you have a purchase invoice with a
> fixed
> >> asset item
> >> created, you can do this:
> >>
> >> Debit Uninvoiced Fixed Asset Receipt
> >> Credit a Payable of some kind--Accounts
> >> Payable? I'm not sure -
> >> often fixed assets are bought with loans.
> >>
> >> Then we'd have to think about doing the
> depreciation
> >> calculations,
> >> that's what I think could be complicated.
> >>
> >> Best Regards,
> >>
> >> Si
> >> sichen@opensourcestrategies.com
> >>
> >>
> >>
> >>
> >
>
>
Re: Purchasing Fixed Assets
Posted by David E Jones <jo...@undersunconsulting.com>.
Hmmm... invoice are _definitely_ "economic events", or artifacts that
have a direct financial impact on a company and therefore when
finalized cause GL entries to be posted. That's the normal way of
doing things. An order is received and there is generally no GL entry
at that point. There are GL entries needed during fulfillment
(inventory issuance), invoicing, receiving payments, etc.
Maybe this isn't what you meant though. I agree that Si's use of a
"Uninvoiced Fixed Asset Receipt" account seems a little funny. When a
Fixed Asset is received you would get an invoice along with it from
the vendor so it would be an unpaid invoice, or payables entry.
-David
On Dec 1, 2006, at 5:21 PM, Chris Howe wrote:
> I know you want to want to link all of these into
> automated actionable steps that make sense to your
> business processes but you must remember:
>
> General Ledger entries are ONLY for economic events.
>
> Receipt of an invoice is NOT an economic event. If
> you receive a fixed asset you:
>
> Debit: Fixed Asset
> Credit: Accounts Payable
>
> If you want to create a relationship between the fixed
> asset and an invoice, great. If you want to create a
> relationship between the invoice and a vendor's
> account, great. If you want to create a relationship
> between a general ledger entry and an invoice or a
> fixed asset, great. But under no circumstance should
> you record a non economic event in the general ledger.
>
>
>
> --- Si Chen <si...@opensourcestrategies.com> wrote:
>
>> David,
>>
>> I think what should happen is this:
>>
>> When any fixed asset is created, if we know the
>> ownerPartyId, then we
>> can create:
>>
>> Debit Fixed Asset (or a specific FixedAsset GL
>> account)
>> Credit Uninvoiced Fixed Asset Receipt
>>
>> Then, when you have a purchase invoice with a fixed
>> asset item
>> created, you can do this:
>>
>> Debit Uninvoiced Fixed Asset Receipt
>> Credit a Payable of some kind--Accounts
>> Payable? I'm not sure -
>> often fixed assets are bought with loans.
>>
>> Then we'd have to think about doing the depreciation
>> calculations,
>> that's what I think could be complicated.
>>
>> Best Regards,
>>
>> Si
>> sichen@opensourcestrategies.com
>>
>>
>>
>>
>
Re: Purchasing Fixed Assets
Posted by Chris Howe <cj...@yahoo.com>.
I know you want to want to link all of these into
automated actionable steps that make sense to your
business processes but you must remember:
General Ledger entries are ONLY for economic events.
Receipt of an invoice is NOT an economic event. If
you receive a fixed asset you:
Debit: Fixed Asset
Credit: Accounts Payable
If you want to create a relationship between the fixed
asset and an invoice, great. If you want to create a
relationship between the invoice and a vendor's
account, great. If you want to create a relationship
between a general ledger entry and an invoice or a
fixed asset, great. But under no circumstance should
you record a non economic event in the general ledger.
--- Si Chen <si...@opensourcestrategies.com> wrote:
> David,
>
> I think what should happen is this:
>
> When any fixed asset is created, if we know the
> ownerPartyId, then we
> can create:
>
> Debit Fixed Asset (or a specific FixedAsset GL
> account)
> Credit Uninvoiced Fixed Asset Receipt
>
> Then, when you have a purchase invoice with a fixed
> asset item
> created, you can do this:
>
> Debit Uninvoiced Fixed Asset Receipt
> Credit a Payable of some kind--Accounts
> Payable? I'm not sure -
> often fixed assets are bought with loans.
>
> Then we'd have to think about doing the depreciation
> calculations,
> that's what I think could be complicated.
>
> Best Regards,
>
> Si
> sichen@opensourcestrategies.com
>
>
>
>