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標題: Simple accounting questions... [打印本頁]

作者: cyberstudio 時間: 2008-7-7 09:13 標題: Simple accounting questions...

Q1.

If I pay GST on something that I intend to claim ITC later, is that accounted for under an expense, so that when I actually receive the ITC it is recorded as income?

Or as an account receivables?

Q2.

Small capital assets, I think under 200, can be depreciated 100% in the same year if my understanding is correct.

How do people usually account for them? Create a sub-account under "capital assets" and depreciate them like other capital assets? Or just account for them under operating expenses?

Your help is greatly appreciated.

作者: Bread_Pudding 時間: 2008-7-7 21:11

1.  I usually do it the following way:

   i) Set up two different GST accounts - one for Collected (generated from sales) and one for ITC.  I usually set these up on the liability side.

   ii) All the ITC goes to the GST - ITC account as DEBIT:

      DR  Whatever Expense
      DR  GST - ITC
            CR  A/P

   iii)  Assume you have to remit GST, when filing the GST return, the journal should look something like this:

         DR  GST - Collected
         CR GST - ITC
         CR Bank

2)  I assume your company doesn't have a fixed asset/depreciation policy.  In theory you can set up fixed asset account and depreciating it over 12 months.  My recommendation is that for such small amount, just expense it, so you have less headache at year end, unless your boss insists that you do the fixed asset way.  It shouldn't have much of an tax impact either.

Enough of nerd talk.

作者: cyberstudio 時間: 2008-7-8 12:46

I see, thank you very much for your help! It clears up my question now.

We are >90% exports so we always receive a cheque from the government. I guess we will do GST on the receivable side, then?

Later, I found out the 100% depreciation applies to cheap hand tools under some "class 12", and still subject to the half-year rule. I am the boss

and I have no preference one way or another. Our accountant told us these are still fixed assets, and I would like to journal them the way they want. But if I have a fixed asset worth only $10, do I bother to depreciate $1 the first year and $1.8 the second? There must exist some minimum value for something to be a fixed asset, right?

作者: Bread_Pudding 時間: 2008-7-9 23:18

There is no minimum amount on dollar value that can be capitalized. Its about the cost-benefit of using such accounting method. I used to booked $150 printers as fixed asset too, but at the end of day, I just don't see a material differences on the statements or in the amount of tax needed to be paid. And its a waste of time keeping track all those small amounts....your depreciation schedule will be super super long.

作者: Bread_Pudding 時間: 2008-7-9 23:22

oh the entry will still be the same if you set up the ITC on the asset side

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