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Advanced Member
 
Group: Forum Members
Last Login: 2/12/2008 1:26:43 AM
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| Hi, I've used the new laws to purchase a property for a superfund and use some borrowings as part of the strategy. On purchase I paid a 10% deposit and then on settlement I paid the balance plus stamp duty plus adjustments (water etc). As I am using gearing I have to hold the property in a specific purpose company although the superfund is the ultimate owner. I presume I should just narrate this rather then try to create a specific company in the accounts. As I have never added property before I am a bit uncertain about what I am supposed to do with the partial payment option and how I enter the details on the flow of funds. The add new property box looks like it will post a string of entries if I click ok but I'm sure what they are going to be. Can you step me through this please? I not clear on how I get the funds matching up to purchase date for the deposit and the settlement date for the balance with all the adjustments correctly recorded. Regards
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MySF Administrator
Group: Administrators
Last Login: Today @ 8:08:32 PM
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Hi,
When you add a property the system will take similar actions to the addition of shares. These are, in sequence: create the asset in the asset list, create the account representing the asset in the general ledger, create the account representing the accumulated depreciation for this asset (even if there will be none), and finally it will post a transaction which contains the debits and credits to show the accounting effects of the purchase.
If and when you add a partial payment it will create another transaction, completely separate from the first, that contains the debit and credit entries to show that there has been another payment made on a separate date.
The best option may be to add a new commercial property purchase into the MySF Sample Fund to see what the effects are and then add a couple of partial payments as well. If you would like to revert to the original MySF Sample Fund and remove any changes from it then please go to File > Refresh Sample Fund.
Regards,
MySF
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Advanced Member
Group: Forum Members
Last Login: 2/12/2008 1:26:43 AM
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| Hi, I'm afraid I am completely confused. When I add a financial asset there is a box for the bank account. When I add a physical asset I can't work out how I nominate the bank account. How do I record that I paid a 10% deposit and then a balance on settlement There is a box for cost of acquisition and a box for tax. I presume I enter the stamp duty in the box for tax and I presume I enter transfer costs, title search and things like mortgage discharge costs in cost of aquisition. What about adjustments for allowances to rates, water etc? Where do they go? How do I break them down into their respective accounts. Do I need to use the General Journal to do all this to set it up? Hopefully I'm missing the dead obvious. If I have costs that specifically relate to this asset can I set the system to report the costs that relate to the specific asset? Regards
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MySF Administrator
Group: Administrators
Last Login: Today @ 8:08:32 PM
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Hi Scott,
If you are adding a physical asset the bank account selection box should be visible on just under the 'Transaction to generate' selection box on the 'Financials' tab (same place as the purchase price etc). However, if you enter a date outside the date range of the current financial year then the bank account selection box disappears because the software will instead expect an opening balance entry. (note that a similar thing happens on add / manage financial assets if you enter a purchase date outside the date range of the financial year).
To record a 10% deposit please record it as a partial payment, and enter the 10% in the purchase price. To add additional payments later you can come back to the same screen and click on 'Add Partial Payment'. You should try this in the MySF Sample Fund.
The purchase price, acquisition cost and the taxes can be best explained like this: the purchase price plus the acquisition cost plus any non-claimable consumption taxes (sometimes this includes part or all of the GST paid) are the capitalised cost of the asset, also called the cost base.
You are buying property, but a painting may be a better example here. If you buy a painting for $10,000 and pay $500 delivery then the purchase price is $10,000 and the cost of acquisition is $500 therefore (assuming that the delivery can be capitalised), if you sell the painting a month later for $15,000 you would pay tax on the gain of $ 15,000 - $ 10,500 = $ 4,500.
So, any capitalised costs associated with the purchase should be recored into the acquisition cost field. Unfortunately we cannot tell you on what is and is not classified as a capitalised cost.
Costs that are not capitalised, but are expensed instead, can be recorded later and 'pinned' to the property. To pin a cost to the property, record a Cash Payment through Cash and Journal Processing > Cash Payments. While recording a payment to an expense account select the added property from the 'Assets' selection box. This will tag the expense against the asset. Note that this does not affect the cost base of the asset and should only ever be used for non-capitalised expenses (such as very minor repairs, insurance expenses).
You can view a list of income and expenses for the fund, or any group of assets, on the Reporting > Analysis Tools > Income Analysis and Reporting > Analysis Tools > Expense Analysis screens.
Regards,
MySF
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Advanced Member
Group: Forum Members
Last Login: 2/12/2008 1:26:43 AM
Posts: 43,
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| Thanks, You were right. The sample fund was set on 2006/07. I thought I was really losing my marbles!
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Advanced Member
Group: Forum Members
Last Login: 2/12/2008 1:26:43 AM
Posts: 43,
Visits: 111
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| Hi, I've been trying to follow the advice you've given on capitalising acquisition costs but I don't see how they fit into your boxes. My aquisition costs are stamp duty, transfer of land fee, mortgage fees and title search fee. The drop down box has various GST type charges which don't apply. If I enter the total of my acquisition costs under the tax box they don't appear in the transaction reporter and no journal entry was created. Do I need to just enter them as a lump sum related to acquisition cost and narrate what they break down into? Is there somewhere else I should enter these capitalised costs? When I paid the deposit I opted to say I had acquired 10% of the property and when I paid the balance it didn't give me the option to change the % ownership. Did I stuff that up or do I need to over ride the number later? I assumed I should have some sort journal entries that increase the property asset by the capitalised cost with balancing entries against the bank plus taxes and charges payable. I'm afraid I can't how this happens and I'm really confused about how the capitalised costs should look as journal entries as they are paid from the bank account. Do they pass through a clearing account? Regards
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MySF Administrator
Group: Administrators
Last Login: Today @ 8:08:32 PM
Posts: 293,
Visits: 390
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Hi,
This is probably best explained with an example. If you are adding a property in the current financial year and you fill out the details under the 'Financials' tab as:
Purchase price (ex tax): $ 100,000.00
Tax on purchase: none
Tax amount on purchase: $ 0.00
Cost of acquisition: $ 5,000.00
Tax on cost: none
Tax amount on cost: $0.00
...then the transaction that is generated is:
DR $100,000.00
DR $5,000.00
CR bank $105,000.000
which is correct.
Any partial payments added in the current financial period of the superfund will also create the same transactions.
However if you add the property for a past financial year then the software will only create the account representing that asset, it will not post a transaction. Instead, as part of opening balances you will need to post a DR to the account representing the property, which will be a total of the purchase price plus the capitalised acquisition costs. The other side of the entry, the CR, should go to members equity accounts.
Once the transaction is posted it will appear in the transaction reporter.
Non-capitalised expenses that are paid for the property should be recorded separately via the Cash and Journal Processing > Cash Payments screen.
The ownership percentage is kept only for display purposes and you can change that at any time, with or without adding more partial payments.
Please let us know if this helps.
Regards,
MySF
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Advanced Member
Group: Forum Members
Last Login: 2/12/2008 1:26:43 AM
Posts: 43,
Visits: 111
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| Ok So I presume there is no way I can record the four components of the acquisition cost separately (stamp duty, transfer of land fee, mortgage fees and title search fee)? Regards
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