Stock Purchased as a Captial Purchase

This an Accounting question you will need to ask advice from your accountant.

Just to help you formulate your understanding of the issue before you call your accountant. We find many of our customers follow the following rules:

• If the prodict is a stock line that you sell in the normal course of business:
  • Purchase and receive the product like any other stock line
  • Then use a stock adjustment to write off the stock against the stock used in business gl account
• If the prodict is not a stock line, if it is a item that you do not sell in the normal course of business:
  • If the dollar value of that product that you are going to purchase in a year is small (not material in accounting terms) then:
    • Enter a Supdeb against the Supplier against Stock Used In Business
  • If the dollar value of that product that you are going to purchase in a year might be large (is expected to be material in accounting terms) then:
    • As above, except instead of writing the value off against the generic stock used in business account, Create a specific expense account for this item. So you can track the material expense. Then write the stock off against it's own expense account.
• If the prodict is not a stock line, if it is a item that you do not sell in the normal course of business and the product is expected to have a useful life of more than one year (it is an asset in accounting terms) then:
  • As above except:
  • Create a General Ledger Asset account to stand for the product and use the GST Code for CAP 
  • Enter a Supdeb against the supplier and dissect it against the General Ledger Asset Account