On 11/30/2022 2:17 AM, Christian Lynbech wrote:
Having been contemplating this as well, I came to the conclusion that I
would create an account for each expensive piece of equipment and then
a common account for all the small stuff.
In Denmark.......
The last is key to this discussion, what are the rules of the
jurisdiction? Like I said, USUALLY you depreciate as fast as the rules
of the jurisdiction allow (because of tax considerations) but this might
not be realistic in terms of the expected useful life of the asset (an
extreme example of that might be a farm tractor, etc.) That means
POSSIBLY you might want to keep a separate set of books* for THAT if a
significant part of real net worth compared to "book" net worth << for a
farming operation might well be hundreds of thousands of dollars
difference!>>
All the little stuff together ---- IF you are doing this (your
jurisdiction doesn't allow you to immediately "expense" low value but
very durable items with a significant total per year, do it by year
(since they will be depreciated together). Again a case where could, be
a significant difference between "book value" and actual. Examples might
be a mechanics tools, etc. The jurisdiction might allow you to "expense"
immediately but the total residual value might be high.
Look, I am sort of breaking my rule here of not trying to teach
fundamentals of accounting << except for non-profits, where I will help
out >> Using accounting software like gnucash does NOT relieve you of
the necessity of learning the fundamentals of accounting as they apply
to your particular endeavor and the rules of your jurisdiction.
Michael D Novack
* You COULD use a spreadsheet for this "off the books" set of books. But
personally I usually use gnucash as then can generate the reports with
little work.
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