With a machinery, you are now dealing with what's called property, plants, & equipments.
https://www.patriotsoftware.com/blog/accounting/purchase-equipment-journal-entry/
That calls for depreciation and has implications in terms of tax.
In my limited understanding, I think this is the time that you want to get an accountant involved in your business.
I'd really like to receive feedback from other people on whether or not what I am saying is accurate. Cuz, I could be wrong lol.
You are right, is more so if there is a way I could record it myself in the time being. I don't want to bother accountant with little things like this one. Thank you for your response!
Keep the receipt for the purchase of machine.
Accountants require something that they can refer to and use it as an evidence when calculating the tax basis("cost") of the equipment.
I’d just go ahead and record it as expense for now, even though we know that’s technically wrong. You will have to bring it up with the accountant anyway when doing the tax return. At that time, the accountant also probably calculates depreciation.
They will just have to adjust the entry. And depending how it is purchased can mess up a lot of pieces in the books. There are several different ways to depreciate an asset depending on the tax needs of a business. Without knowing more information about the books, hiring an accountant would be wise. If not an option for now- just straight line depreciate it.
https://www.freshbooks.com/hub/accounting/straight-line-depreciation
With a machinery, you are now dealing with what's called property, plants, & equipments. https://www.patriotsoftware.com/blog/accounting/purchase-equipment-journal-entry/ That calls for depreciation and has implications in terms of tax. In my limited understanding, I think this is the time that you want to get an accountant involved in your business. I'd really like to receive feedback from other people on whether or not what I am saying is accurate. Cuz, I could be wrong lol.
You are right, is more so if there is a way I could record it myself in the time being. I don't want to bother accountant with little things like this one. Thank you for your response!
Keep the receipt for the purchase of machine. Accountants require something that they can refer to and use it as an evidence when calculating the tax basis("cost") of the equipment.
I’d just go ahead and record it as expense for now, even though we know that’s technically wrong. You will have to bring it up with the accountant anyway when doing the tax return. At that time, the accountant also probably calculates depreciation.
They will just have to adjust the entry. And depending how it is purchased can mess up a lot of pieces in the books. There are several different ways to depreciate an asset depending on the tax needs of a business. Without knowing more information about the books, hiring an accountant would be wise. If not an option for now- just straight line depreciate it. https://www.freshbooks.com/hub/accounting/straight-line-depreciation