Asset Generated Journals Overview
For GST in Australia, it’s now necessary to report on your Capital Acquisitions through your Business Activity Statement. The SapphireOne user can achieve this with ease through the use of Asset Generated Journals. Below are examples of the journal Assets that will be created in SapphireOne Financials.
Tax Codes in Asset Generated Journals
As a result of installing Assets, the following Tax Codes will have to be created.
| Tax Codes | Description | Percentage |
|---|---|---|
| C | Capital Acquisitions | 10% |
| CN | Capital Acquisitions No Tax in Price | 0% |
| CF | Capital Acquisitions GST-free | 0% |
| CI | Capital Acquisitions Input Taxed Supply | 0% |
| CP | Capital Acquisitions Personal Use | X% |
Purchase of an Asset
Purchase of an Asset – Example 1
If, for example, when purchasing an asset for $1,100 including GST, 100% Business Use is to be applied. The Tax Code that applies to the transaction is “C”. Upon entering a Vendor ID, a VI with the following journal will be generated. If no Vendor ID has been entered, a MP journal will be created as a result. Evidently, the difference between the two journals is that the Trade Creditors account is replaced with your Cash at Bank account.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Non Current Asset – Net Value | C | $1,000 | |
| Tax Out – Current Asset | Z | $100 | |
| Trade Creditors – Current Liability | Z | $1,100 |
The Payment that will be generated within SapphireOne Financials will be as follows:
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Trade Creditors – Current Liability | Z | $1,000 | |
| Cash at Bank – Current Asset | Z | $1,100 |
In the Purchase screen enter the Tax Inclusive value of the Asset. If no Vendor ID is entered the transaction will be processed to the entered Bank Account.
Purchase of an Asset – Example 2
If, for example, an asset is purchased for $1,100 including GST and 80% Business Use is to be applied. The Tax Code that would apply to the transaction is “C”. If the Vendor ID has been entered a VI with the following journal will be generated. If no Vendor ID has been entered, SapphrieOne creates an MP journal as a result. Evidently, the difference between the two journals is the Trade Creditors account is replaced with your Cash at Bank account.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Non Current Asset – Net Value | C | $800 | |
| Personal Usage – Non Current Asset | CP | $220 | |
| Tax Out – Current Asset | Z | $80 | |
| Trade Creditors – Current Liability | Z | $1,100 |
The Payment that will be generated within SapphireOne Financials will be as follows:
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Trade Creditors – Current Liability | Z | $1,100 | |
| Cash at Bank – Current Asset | Z | $1,100 |
Assets will automatically apply the Tax Code of CP based on the percentage applied at Business Use in the Asset Inquiry Depreciation screen. If no Vendor ID is entered the transaction will be processed to the specified Bank Account as a result.
Revaluation of an Asset
Revaluation of an Asset – Example 1
If, for example, you make an addition to an existing Asset of $1,100 including GST, 100% Business Use is to be applied. The Tax Code that would apply to the transaction is “C”. Upon entering a Vendor ID, a VI with the following journal will be generated. If no Vendor ID or a Tax Code has been entered, a GJ Journal will be created. The difference between the two journals is that the Trade Creditors account is replaced with your Revaluation Reserves account.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Non Current Asset – Net Value | C | $1,000 | |
| Tax Out – Current Asset | Z | $100 | |
| Trade Creditors – Current Liability | Z | $1,100 |
Revaluation of an Asset – Example 2
If, for example, we make an addition to an existing Asset of $1,100 including GST, 80% Business Use is to be applied. The Tax Code that would apply to the transaction is “C”. Upon entering a Vendor ID, a VI with the following Journal will be generated. If no Vendor ID or a Tax Code has been entered a GJ Journal will be created. Evidently, the difference between the two Journals is the Trade Creditors account will be replaced with your Revaluation Reserves account.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Non Current Asset – Net Value | C | $800 | |
| Personal Usage – Non Current Asset | CP | $220 | |
| Tax Out – Current Asset | Z | $80 | |
| Trade Creditors – Current Liability | Z | $1,100 |
Revaluation of an Asset – Example 3
If, for example, we make an addition to an existing Asset of $1,000 with no tax, 100% Business Use. It will be dependent on the transaction that Tax Code will apply, “CF”, “CI” or “CN”. If the Vendor ID has been entered a VI with the following journal will be generated. If no Vendor ID or a Tax Code has been entered a GJ journal will be created. The difference between the two journals is that the Trade Creditors account is replaced with your Revaluation Reserves account.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Non Current Asset – Net Value | CN | $1,000 | |
| Trade Creditors – Current Liability | Z | $1,000 |
Revaluation of an Asset – Example 4
If, for example, we make an addition to an existing Asset of $1,000 with no tax, 80% Business Use. It will be dependent on the transaction that Tax Code will apply CF, CI or CN. If the Vendor ID has been entered a VI with the following journal will be generated. If no Vendor ID or a Tax Code has been entered a GJ journal will be created. Evidently, the difference between the two journals is the Trade Creditors account is replaced with your Revaluation Reserves account.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Non Current Asset – Net Value | CN | $800 | |
| Personal Usage – Non Current Asset | CP | $200 | |
| Trade Creditors – Current Liability | Z | $1,000 |
Disposal of Asset
The Disposal of an Asset including GST charged on the sale of a second hand item. If the historical cost for example is $1,000 no GST in price plus an accumulated depreciation of $200, disposal value $1,210. The Tax Code that would apply to the transaction is “C”. The transaction generated will be a MR journal.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Cash at Bank – Current Asset | Z | $1,210 | |
| Non Current Asset – Net Value | C | $1,000 | |
| Accumulated Depreciation | Z | $200 | |
| Profit/Loss on Disposal of Asset – Other Income | Z | $200 | |
| Capital Gain of Disposal of Asset – Other Income | C | $100 | |
| Tax In – Current Liability | Z | $110 |
The Disposal of an Asset with no GST in Price plus an accumulated depreciation of $200. IIf, for example, the historical cost is $1,000 disposal value is $900. The Tax Code will be “CN”. The transaction generated will be a MR journal.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Cash at Bank – Current Asset | Z | $900 | |
| Non Current Asset – Net Value | CN | $1,000 | |
| Accumulated Depreciation | Z | $200 | |
| Profit/Loss on Disposal of Asset – Other Income | Z | $200 | |
| Capital Gain of Disposal of Asset – Other Income | CN | $100 |
The Disposal of an Asset where the item has no GST in the price on the sale of a second hand item. If, for example, the historical cost is $1,100 no GST in price, plus an opening written down value of $300 depreciation, disposal value $1,100. The Tax Code that would apply to the transaction is “CN”.
| Description | Tax Code | Debit | Credit |
|---|---|---|---|
| Cash at Bank – Current Asset | Z | $1,100 | |
| Non Current Asset – Net Value | CN | $800 | |
| Accumulated Depreciation | Z | $300 | |
| Profit/Loss on Disposal of Asset – Other Income | Z | $300 | |
| Capital Gain of Disposal of Asset – Other Income | CN | $300 |
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