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Forum Guru
 
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Last Login: 12/07/2011 2:31:58 AM
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| Sorry, one more thing. How do I set up a loan account for a borrowing? As I am using the new rules on gearing a superfund I need to put the liability somewhere. What account should I use? Regards
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MySF Administrator
Group: Administrators
Last Login: 4/11/2010 3:24:01 PM
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Hi,
There are a couple of solutions.
First, you can set up a new bank account and let it go into negative. This negative asset will have the same impact as establishing a positive liability. However, this will mean that your overall exposure to cash will most likely turn negative. While that is technically correct, your asset allocations may well appear odd and out of line with your actual investment strategy.
The second option would be to create the necessary liability accounts and establish the loan that way. The steps would be as follows:
I) Create New 'Non-Current Liabilities' account
1.- Go to System Setup > General Ledger
2.- Click on the Add Account link at the base of the account list
3.- Fill in the details as:
Reporting type: Summary
Account type: Liability
Account Number: 2800
Account Name: Non-Current Liabilities
Parent: 2000 - Liabilities
Click on Save button, click on Yes when you see the warning
Click Exit to go back to the Account list
4.- Once again click on the Add Account link at the base of the account list
5.- Fill in the details as:
Reporting type: Detail
Account type: Liability
Account Number: 2810
Account Name: Mortgages (or whatever other name you would like to use)
Parent: 2800 - NonCurrent Liabilities
Click on Save button, click on Yes when you see the warning
Click Exit to go back to the Account list
II) Check that the account has been added correctly
1.- Go to System Setup > General Ledger of Accounts
2.- Expand out '2000 - Liabilities' by clicking on the [+] next to the number
3.- You should find that there is an account 2800 and under that there is account 2810 (as a sub account, visible if you press the [+]
III) Record receipt of the loan funds
1.- Post a general journal which will be
DR clearing bank account $x
CR 2810 Mortgages $ x
2.- Use the funds from the clearing bank account to pay for (part of) the property
IV) Interest incurred
1.- Post a general journal which will be
DR 5165 Interest Paid $ x
CR 2810 Mortgages $ x this line increases the outstanding debt
V) Interest payment or payment to reduce outstanding debt
1.- Post a general journal which will be
DR 2810 Mortageges $ x
CR bank used to pay this amount $ x
The second option is obviously more difficult, but it is a better solution that is likely to keep your accountant and your auditor happy. If you choose the second option your asset allocations charts will not reflect your actual negative allocations to cash (due to the loan).
Regards,
MySF
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Forum Guru
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Last Login: 12/07/2011 2:31:58 AM
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| Thanks, That worked well. Another question. In the statement of adjustments there was an allowance for Land Tax. I couldn't see an account under expenses specifically for that. Should I follow the same steps to create one and can you suggest a standard number so all users for have a standard approach flowing through upgrades? I also had a figure for the discharge of a mortgage. As I understand it the purchaser actually pays for the discharge of the vendors mortgage but the settlement figure is adjusted to allow for it. How should I classify this? It's obviously not really my expense. I imagine it's a liability I have been compensated for but it's not my liability. Where do I put it? Regards
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MySF Administrator
Group: Administrators
Last Login: 4/11/2010 3:24:01 PM
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Hi,
This expense could be recorded into 5160-Investment Expenses. Alternatively you could add an account with number 5141 as 'Land Tax'. The parent account should be 5100 and the account should roll to 3505-Profit and Loss.
I am not very familiar with the discharge of mortgage process, so i would like to ask for some more details on this.
Regards,
MySF
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Forum Guru
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Last Login: 12/07/2011 2:31:58 AM
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| Thanks. It confused me also but I'm not going to try and understand why they did it. If I put new carpet in a property I imagine that's a depreciating fixture rather than something I expense in the current year. How do I record that? regards
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MySF Administrator
Group: Administrators
Last Login: 4/11/2010 3:24:01 PM
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Hi,
This would count as an improvement to the property and it would be an asset in itself.
Please add the carpet as a new physical asset in the same class as the property. When you see the selection of 'Is this an improvement on an existing asset?' (just under the 'Short name' field) please answer Yes and select the property into which this carpet was placed.
Please tick the 'Depreciation Required?' box on the right hand side of the financial tab and then click on the Depreciation Schedule link to open a new screen. On this screen fill in the depreciation details for this item. Note that you will probably have just the one depreciation item, which will be the carpet itself.
Regards,
MySF
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Forum Guru
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Last Login: 12/07/2011 2:31:58 AM
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| Hi Have you had a chance to look at the discharge of mortgage question. Apparently it is a common practice
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MySF Administrator
Group: Administrators
Last Login: 4/11/2010 3:24:01 PM
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Hi,
Apologies for the delay in answering this part of your question.
The discharge of mortgage amount is normally shown on the Statement of Adjustments document. Typically this amount does not need to be recorded separately as the amount is incorporated into the amounts paid the fund. Please check if this was the case in this instance.
Regards,
MySF
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Forum Guru
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Last Login: 12/07/2011 2:31:58 AM
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| Hi, It was on the statement of settlements as a separate line. I'm just trying to reflect the statement in my records so the auditor is happy. Any sense what the entries would be? regards
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MySF Administrator
Group: Administrators
Last Login: 4/11/2010 3:24:01 PM
Posts: 464,
Visits: 633
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Hi,
The advice we have received is that this does not need to be added as a separate line. Not sure about the entries as there is no additional payment from you, there is no additional payment to you, you do not incur any ongoing liability and this is certainly not an asset in itself.
One possible solution would be to attach a pdf version of the statement of adjustments to the property, which would ensure that the auditor can quickly find what happened.
Regards,
MySF
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