recording reimbursable expenses and split rent expenses

[Jonathan Diamond]

Hi Edward,

Thank you for your thoughtful and detailed response.

My expenses are not related to travel and I know exactly what I will be reimbursed for, so I have chosen to record these reimbursable expenses in Asset:Receivables:Company Expenses. 

When I incur the reimbursable expense, I will 1) decrease checking account and 2) increase Asset:Receivables:Company Expenses.

When I get a cheque from my company for the above (or a collection of reimbursable expenses), I will 1) decrease Asset:Receivables:Company Expenses and increase checking account.

I think the above works well in that my expenses remain personal expenses and are not confounded by business expenses and the assets category relating to reimbursable expenses remains separate and easily identifiable and reflects the fact that it is money I am owed. 

That said, your point is very well taken that if you are unsure how much will be reimbursed, the personal payments should be listed as an expense and the reimbursement should counter that expense, whereby the net expense accurately reflects where your personal income is spent. And this point is something i'll keep in mind.

The point you brought up regarding the vehicle expense is a good one and one I've contemplated. I have a solution that I think works that i'll share with you. The main issue as you presented is that the reimbursed vehicle expense is typically based on a per kilometre (or mile!) rate. That is, there is no specific vehicle expense (i.e., lease payments, gas, repairs etc) that you're expensing. For this reason, I consider reimbursement as simply reducing my overall vehicle expense ("overall" being the key word). Under my vehicle expense category, I have the following: 

Expense:Auto:Gas
Expense:Auto:Lease payments
Expense:Auto:Repair and Maintenance

and

Expense:Auto:Vehicle Reimbursable Expense Account

Therefore, when I use my car for a business related trip, I will 1) decrease (rebate) Expense:Auto:Vehicle Reimbursable Expense Account based on the distance driven and the cost per Km. and increase Asset:Receivables:Company Expenses (as above). That is, unlike the other traditional expense where I am taking money from checking and putting it in a reimbursable expense asset, here I am incurring a negative expense and placing that money in the reimbursable expense asset.  

What this entry is doing is decreasing my net vehicle expense and adding the correct reimbursable to the Asset:Receivables:Company Expenses account. 

Thus, at the end of each month, I have a solid list in Asset:Receivables:Company Expenses account that reflects the total costs I will be reimbursed. 

 I would certainly value any insight you have on the above.

Jonathan 




> On Feb 15, 2015, at 12:23 PM, Edward Doolittle <edward.doolittle at gmail.com> wrote:
> 
> 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 <mailto: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