I’ve mentioned this a few times, but your software is still incorrectly classifying depreciation as a current liability in some balance sheet views. I know that you can show the net asset balances by selecting the checkbox, but it is generally far more useful to see gross assets and depreciation together.
As far as I am aware (and I’m a chartered accountant with 20 years experience) it is never correct to put depreciation in current liabilities.
What is the rationale for this ongoing classification issue?
The “net book value” format is used as the default now.
If any balance is discovered on 0020, 0030, 0040, 0050 0100 or 0110, the corresponding depreciation will be offset without explicitly listing those entries in the liabilities section. Can you please provide more detail on your Asset and Depreciation codes? It may be you have added some custom codes that are not getting picked up.
The net book value option doesn’t currently itemise the depreciation, but we could certainly look at this in order to improve the clarity of the report.
As an example, I’m posting additions to office equipment to 0030 and depreciation to 0031. On deselecting ‘Show Net Book Value’ the expected result (in line with Financial Reporting Standards) would be:
Fixed Assets:
0030 X
0031 (Y)
Net Book Value X-Y
What we actually see is:
Fixed Assets:
0030 X
Current Liabilities:
0031 (Y)
It’s a very strange way of displaying a balance sheet.
This is a hangover from how the balance sheet was originally implemented. NBV option was later added to offset the depreciation, so it’s removed from the liabilities section.
I’ve added a request to our mid-term planner to review this so that the asset + depreciation can be shown as a breakdown. It should be reviewed in the next week.
If you think about it, then notwithstanding financial reporting norms, it makes sense for the ‘Total Fixed Assets’ balance to remain the same no matter whether you’re looking at the summary display or the drill-down.
We have just released an update to the balance sheet to provide a clearer breakdown of any depreciation.
We have removed the “Show NET book value” checkbox and defaulted to always show a 3 line breakdown of the asset value, less depreciation and a final net book value.
We would be grateful if you would take a look and share any thoughts you have.
Since this change, my balance sheet now doesn’t (balance)! The “net assets” and “total capital and reserves” always used to match exactly but they now differ by precisely the total of the “accumulated depreciation” lines in the new layout. Doing the sums by hand the total fixed assets, current assets, current liabilities and net current assets totals are right, but the “total assets less current liabilities” is wrong, and hasn’t counted the depreciation.
Unfortunate timing for me as I’m meeting my accountant on Wednesday to go through the 2016-17 books so he can do the tax returns. Hopefully it’s an easy fix.
