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RE: Correctly recording Instalment warrants

scott — Thu, 13 Mar 2008 02:55:25 GMT

Brilliant!! My accountant will think I am a genius.

Thanks

RE: Correctly recording Instalment warrants

MySF2 — Wed, 12 Mar 2008 19:55:08 GMT

Hi,

You should still use the usual dividend screen and record the dividend as going into a clearing account. This will ensure correct processing for all components. Then, to increase the cost base of the warrant process a general journal which will be:
DR Warrant
CR Clearing Account
and go to the Asset Checker to increase the cost base to the suggested amount.

You can remove assets that were added incorrectly or by accident through Housekeeping > Utilities > Remove Asset. Please note that this process will ask for your username and password even if checking is turned off. If you have forgotten your username and password for this fund then you can change them through File > Settings.

You can change the code, name and shortname of any shares through the Manage Fund > Add or Manage Assets > Financial Assets > Shares screen. Select the asset you wish to change, modify the code (and shortname to modify the XYZ@01/01/07 display) and click Save.

Regards,

MySF

RE: Correctly recording Instalment warrants

scott — Wed, 12 Mar 2008 04:30:34 GMT

Thanks,

This is useful.

I'm still unclear how a franked dividend should be recorded against the warrant. If I used the manage cash route and record it as dividend income the dialogue box will prompt me to enter a bank account which would have to be a clearing account as the asset isn't a bank account. Are you saying ignore the normal way of recording a dividend and instead just debit the Instalment warrant and credit dividends received and credit a franking account? I presume that means the asset cost base will pick it up that way. If I do it that way how does the dividend income get apportioned to the separate lines of stock if I bought it as a line of 1000, then another 1000 then another 5000? Is it automatically done or do I have to push something through?

A second query, the asset checker shows me I have a line of stock with a zero account balance and a zero suggested cost base. I'm pretty sure it has arisen because I have reversed or cancelled a previous entry because I mucked it up and reentered the details correctly later. I'm left with this over statement over the number of units held. How do I get rid of the redundant line of stock from the asset checker?

Also, I have obviously been sloppy on short names for a couple of purchases. I like it to say stockcode@date as the shortmane. On the odd entry I have incorrectstockcode@date. How do I edit the names?

Regards

RE: Correctly recording Instalment warrants

MySF2 — Tue, 11 Mar 2008 17:58:24 GMT

Hi,

There have been some recent changes to the software which make some of this task easier.

A reduction in the cost base of the assets in the past could only be achieved by processing a capital return or processing a distribution which contains tax deferred income.

We have since added a new screen under System Setup > View and Edit Asset Cost Base. This screen will show you the whole list of current financial assets. For each asset you will be shown the number of units owned, the balance of the account that represents the asset in the general ledger and their cost base as stored with the asset. An additional column displays the 'Suggested cost base' which shows the the cost base implied by the account balance in an editable currency field. The suggested cost base is calculated as:
Suggested cost base = account balance / number of units

Where this is handy in the case of warrants is that you will probably not need to use a capital return via a clearing account to process the fall in cost base when you move the prepaid interest and the increase in the cost base when a dividend is received. Instead, you can process general journals to move money into / out of the account representing the warrant in the general ledger and then you can use the screen mentioned above to change the cost base.

Note that the 'Suggested cost base' box shows the amount in green if it is the same as the cost base of the asset as stored in the asset and shows the number in blue if there is a mismatch.

Regards,

MySF

Correctly recording Instalment warrants

scott — Fri, 07 Mar 2008 18:24:48 GMT

Hi,

I know you have helped me with this in the past but it is so messy I'm afraid I have got myself lost again. Perhaps if you could set out the entries and steps for me I can use it like a template.

When I buy an Instalment warrant I make the following entries

Dr 1154 Warrant

Cr 1101 Bank

Then to adjust for the prepaid interest component of the price

Dr 1149 Prepaid Interest

Cr 1154 Warrant

Each month I need to expense the Prepaid Interest so I Dr 5165 Interest and Cr 1149 till the amount is used up. That bit's easy.

What I need to do is amend the asset register cost by going to Housekeeping>Utilities>Capital Repayment. This is where I need help! I know somewhere along the line I need to create a clearing account but I'm not sure what I'm actually up to.

Also, when the warrant receives a dividend it reduces the balance of the loan outstanding and I need to increase the cost base of the Warrant. The dividend needs to go through a clearing account a/c as the cash is not received directly. It just reduces the loan.

Can you please set out the entries for an instalment warrant to show how I keep the asset register value correct after adjusting for prepaid interest for an on market purchase and how I adjust the cost base of the warrant to reflect dividends received.

A wizard would be helpful. The ATO has made it's position clear on Instalment warrants and new warrants treat the put as part of the interest cost so it can be expensed. (This isn't retrospective though).

I'm not an accountant so I find the entries rather difficult.

Regards