Alternatively, if you want to retain the undershot/overshot character
of the expense in account balances, you can do the last transaction
like this:
Expense:Machine maint. ;amount if overshot
Liability:A/P:Machine maint. ;clear acct balance
Cash ;amount paid
OR
Liability:A/P:Machine maint. ;clear acct balance
Cash ;amount paid
Expense:Machine maint. ;amount if undershot
Note that if you enter the last tx it creates a 'negative expense'
that will be summed up with its child account (Machine
maint.:Estimated) balance and reduce the total returning the total
amount expensed.
On Sun, Apr 7, 2013 at 5:06 PM, David Gilman <[email protected]> wrote:
> Intermediate Accounting, Wiley, 14th ed:
>
> In general, costs incurred to achieve greater future benefits should
> be capitalized, whereas expenditures that simply maintain a given
> level of service should be expensed.
>
> however, the book goes on and explains a situation where maintenance
> that maintains the level of service is scheduled every three years.
> The authors say that it's inappropriate to record a liability before
> it has to pay to an outside party and so in that situation you don't
> record it until you have to pay. YMMV.
>
> The accounts for expensing:
>
> Expense:Machine maintenance
> Liability:Accounts payable:Machine maintenance
>
> Later, when you actually pay:
> Liability:Accounts payable:Machine maintenance
> Cash
>
> And if you overshot budgeted expenses:
> Expense:Machine maintenance ; overshot amount
> Liability:Accts payable:Machine maintenance
> Cash
>
> Alternatively, something like this:
>
> Expense:Machine maint.:Estimated
> Liability:A/P:Machine maint.
>
> Expense:Machine maint. ;actual amount if overshot
> Liability:A/P:Machine maint.
> Cash
> Expense:Machine maint.:Estimated ; close out the entire account balance
>
> Note that if you're doing manufacturing maintenance expenses of the
> equipment used to manufacture wind up in Cost of Goods Sold and so the
> transactions are different.
>
>
>
>
>
>
> On Sun, Apr 7, 2013 at 3:39 PM, Rick F <[email protected]> wrote:
>> This is more a general accounting question than it is a Ledger question, per
>> se, but it potentially uses ledger specific features like virtual accounts.
>>
>> How can I account for projected major maintenance that results from machine
>> use? Every hour of machine operation builds up a liability for an eventual
>> overhaul. Once the machine is overhauled, this liability needs to be zeroed
>> out. How is this accounted for in a double entry system? At any given
>> point in time I'd like to be able to see how much I should have set aside
>> for the upcoming overhaul of the machine so I can check if I have the assets
>> available. The other thing I'd like to keep track of is the eventual
>> difference between projected and actual overhaul costs. Knowing this I know
>> whether to bump up or down the per hour liability.
>>
>> Here are the basic transactions. How can they be extended to keep track of
>> the money I need to have set aside for maintenance? Let's assume the
>> machine needs to be overhauled every 100 hours of use and the projected
>> overhaul cost is currently $1,000.
>>
>> 2013/04/05 Use the machine
>> Expenses:Machine:Used 1 hour
>> Assets:Fixed:Machine
>>
>> 2013/04/07 Repair the machine
>> Expenses:Machine:Maintenance $1,234.56
>> Assets:Current:Checking
>>
>> --
>>
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>
>
>
> --
> David Gilman
> :DG<
--
David Gilman
:DG<
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