[GNC] Is it reasonable to have sub-accounts under Equity:Fixed Assets?

[Christopher Lam]

If your company was operating for a while before 01/03/22, you'll want your
balance sheet (aka "Statement of Financial Position") to reflect accurately
the value of your assets on 28/02/22. You could input your depreciated
asset values on that date.

However I also like to record the original purchase date of fixed assets,
which helps me tremendously plan ahead wrt warranty determination,
remembering how much and when I paid for something. So, I'd record the
original purchase price on the original purchase date too.

My starting book could look like:

* 01/03/2014 Initial purchase machinery, effective life of 10 years, EOL on
01/03/2024
Equity:Opening Balance -$10,000
Asset:Fixed +$10,000

* 28/02/2022 Accumulated Depreciation (2014 to 2021)
Asset:Fixed -$7,000
Equity:Depreciation +$7,000

* 01/03/2022 Annual Depreciation
Asset:Fixed -$1,000
Expense:Depreciation +$1,000

* 01/03/2023 Annual Depreciation
Asset:Fixed -$1,000
Expense:Depreciation +$1,000

* 01/03/2024 Annual Depreciation
Asset:Fixed -$1,000
Expense:Depreciation +$1,000

Thus, on 01/03/2024 the balance in Asset:Fixed is now $0.

On Mon, 16 Jan 2023 at 20:30, Dr. David Kirkby <
drkirkby at kirkbymicrowave.co.uk> wrote:

> Apologies if this is too much an accounting question, but I'm stuck, and am
> trying to work out how GnuCash will handle this.
>
> I'm trying to enter into GnuCash my company accounts for this financial
> year only - I'm not going to bother trying to enter every transaction since
> the company started. So the opening balances should reflect the company's
> financial position on 28/2/2022, and transactions from 1/3/22 being
> recorded.
>
> I have the account
>
> Assets:Fixed Assets
>
> All that contains is test equipment and computer equipment, all of which
> will be depreciated - there's no land, or other things that don't
> depreciate.
>
> I initially set Assets:Fixed Assets to have an opening balance of £x, as
> that's what my accountant told me the total of all thef fixed assets was
> worth. I see that is reflected in the account
>
> Equity:Opening Balances
>
> However, after I asked him, my accountant gave me a breakdown of the net
> value of the individual fixed assets, which have obviously depreciated over
> time.  I thought it would be useful to have their individual net values on
> 28/2/2022 recorded in GnuCash, so when I depreciate them next year, I can
> keep a track of the depreciation. (I also thought of depreciating them
> monthly, which I could probably do with the scheduled transactions, as my
> accountant is using linear depreciation).
>
> That brings me to the problem that my initial entry for the opening
> balance of these fixed assets would be wrong, and should possibly set to
> zero.
>
> Can I set that balance to zero, then delete the appropriate Equity:Opening
> Balances entry?
> Would it be sensible to have a sub-account under  Equity:Fixed Assets, or
> is that just not sensible?
>
> Obviously by the very nature of a double-entry system, in order to debit
> the Fixed Assets, I need to credit somewhere else.
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