David, Thanks. The piece you filled in for me is treating the maintenance as a future expense. This balances everything and makes the future expense show up as a liability on the balance sheet. Here's what I came up with, translated in ledger.
2012/01/01 Opening Balances Expense:Reserves:Machine:Maintenance $9,900 Liabilities:Not Payable:Machine 2012/05/01 Use the machine Expense:Future:Machine:Maintenance $100 Liabilities:Not Payable:Machine 2013/01/01 Fix the Machine Expense:Machine:Maintenance $12,345 Asset:Current:Checking Expense:Future:Machine:Maintenance =$0 Liabilities:Not Payable:Machine =$0 Now I still need to add the machine-hours piece and the automated transactions that convert those hours to these future liabilities, but that's just a coding issue, not an accounting one. I like that better than relying on the virtual transactions to account for these future expenses. This doesn't give me a separate account to track the difference between projected vs. actual expenses, but that was really only a nice-to-have. Rick On Sunday, April 7, 2013 3:20:39 PM UTC-7, David Gilman wrote: > > 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]<javascript:>> > 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] <javascript:>> > 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 > >> > >> -- > >> > >> --- > >> You received this message because you are subscribed to the Google > Groups > >> "Ledger" group. > >> To unsubscribe from this group and stop receiving emails from it, send > an > >> email to [email protected] <javascript:>. > >> For more options, visit https://groups.google.com/groups/opt_out. > >> > >> > > > > > > > > -- > > David Gilman > > :DG< > > > > -- > David Gilman > :DG< > -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/groups/opt_out.
