recording reimbursable expenses and split rent expenses

[Edward Doolittle]

I had a question similar to your question 1 last year. I'm still not
totally sure how to handle some things, so perhaps this would be a good
time to review.

I have three different classes of travel reimbursements: 1) expenses like
hotels where I am generally reimbursed the full amount on the bill; 2)
expenses like meals where I am reimbursed a set amount per meal (something
like $8 for breakfast, $12 for lunch, $20 for dinner); and 3) "mileage"
where I am reimbursed at a certain rate per km of authorized travel with my
own vehicle. (Travel using a rental car would be more like category 1).

One major principle to keep in mind is that the accounting treatment should
be consistent with tax rules in your jurisdiction. For example, if you
spend $30 for dinner and are reimbursed $20, it could be the case that the
remaining $10 expense can be deducted from your income for tax purposes,
depending on the nature of the trip. So the answer to your question depends
on a lot of details (your tax regime, the details of the trip (e.g.,
professional development?)) that we don't have and that may change from
trip to trip. So to get a definitive answer you should ask an accounting
professional familiar with your situation.

That said, I guess I would respond to your general question by saying that
it probably makes more sense to book expenses when you travel, and use
reimbursements to reduce or rebate your expense accounts. You might want to
use a new expense account for each trip, which could help you at tax time,
but the downside is that your chart of accounts would keep changing. The
downside could be mitigated if your reports only display up to a certain
depth in your chart of accounts; then reports would still be comparable
from one period to the next.

I would only book a charge as an asset if I were quite confident that I
would get the exact amount of the charge back in return. For example, I'm
reasonably confident that I would get full reimbursement for a hotel room,
but if I ended up staying at the Ritz for whatever reason, I might not be
fully reimbursed. For that reason, and because it makes sense to group
related charges for a trip all together, I would book the hotel as an
expense and use the reimbursement to counter that expense.

In the case of supplies which I need to do my work that aren't necessarily
trip-related, e.g., a textbook that I might need to use on several
different trips, it might make sense to book the charge as a receivable
under assets, because then I am quite confident that I will get reimbursed
the full amount.

For meals, I'm still combing the earth for that $8 breakfast, so I
regularly pay more than what is allotted. Booking the expense as an asset
makes no sense, because then I would accumulate dozens of small assets
(difference between what I paid and what I get reimbursed) that I could
never collect and would have to "write down", which might be quite opaque
from a tax perspective. So it makes sense to view the reimbursement as
offsetting expenses, which can be nicely structured into expense
sub-accounts for tax purposes, rather than paying a "receivable".

The one issue that I still don't have a handle on is reimbursement per km
for driving my personal vehicle while on a business trip. It's different
from meals because it's harder to pin down the expense to a particular
time, to say that it was definitely connected to a particular trip. For
example, if I gas up two days before the trip, some of that fuel was
expended for personal use rather than for the trip, so I can't see booking
the whole fuel receipt as a trip-related expense. Similarly if I gas up two
days after returning from the trip. I could try to gas up just before I
leave and just after I return, but that's not always possible. Anyway,
there are other related expenses like oil change, tire replacement,
depreciation(?), etc., that are impossible to tie exactly to a given trip.
(I'm not going to switch tires just for a trip!)

My remaining question is, how should I account for personal vehicle
expenses when on a reimbursable trip? I'm thinking that maybe it would be
appropriate to have my own per km cost to operate the vehicle, consistent
with tax rules. When the trip happens, I can calculate the cost of the trip
from my perspective and transfer the amount from a general vehicle expense
account to the trip expense account. When the reimbursement happens, I can
reverse the expense in the trip account. Yes?

One other non-GnuCash-related Bad Thing that happens in my experience: the
finance department at my institution will sometimes combine travel claims
and process several claims as one batch, which increases my frustration. It
would probably be helpful for your sanity to space out claims so they're
less likely to be batched together. That will save time disentangling
reimbursements later and would be helpful from the paper records
perspective, too, if you keep information about different trips in
different file folders.

E


On 14 February 2015 at 16:06, Jonathan Diamond <samuel.diamond at me.com>
wrote:

> Hello, I am new to gnucash and I am just getting the hang of it. I have
> two separate questions that I hope you can answer for me.
>
> 1. I work for a company and often incur expenses such as meals or office
> supplies for example that will be reimbursed to me at the end of the month.
> I am having trouble determining how to record these reimbursable expenses
> in gnucash as well as the reimbursement itself.
>
>         a) Are the reimbursable expenses recorded as expenses that accrue
> in an account called “business expenses” for example? And then when I
> receive a cheque from my company at the end of the month for these
> expenses, I simply take money from the “business expense” expense account
> and transfer it back to my checking account for the amount of the
> reimbursed cheque? This seems okay, but it doesn’t account for the cheque
> from my company deposited into my checking account.
>
>         b) Similar to a) but set up an asset account called “monies owed”
> for example because the reimbursable expenses I incur are technically
> monies i’m entitled to and therefore could be considered an asset.
>
> 2. My roommate pays for half my monthly rent. He transfers money to me
> before I pay rent and then I pay the total of the rent. I want to keep
> track of my rent expense but the money I receive from my roommate isn’t
> income nor is the total I pay indicative of my total expense, it’s simply
> money that flows through my account to my landlord. How do I account for
> this accurately?
>
> Thank you kindly for any help you can provide me.
>
> Kind regards,
> Jonathan
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-- 
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2

« Toutes les fois que je donne une place vacante, je fais cent mécontents
et un ingrat. »
-- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI