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What Account Type for "Machinery Maintenance" expenses?


#1

I have a case where 2 expense accounts for maintenance costs (paying a service staff for repairing machines as well as purchasing spare parts) will be required

  • Maintenance for Operational Machinery (i.e. repairing a sewing machine in a garment factory)
  • Maintenace for Office Equipment (i.e.repairing a computer, printer or coffee maker)

now I have noted there exists an Account Type named “Expenses included in asset Evaluation” and I am wondering whether I should choose that over just “Expense” as Account Type for those maintenance costs


#2

I do it under Expenses > Indirect Expenses

In the Indirect Expenses there is already a default catagory for Office Equipment Maintneance and I added 2 more:

  • one for Fleet Vehicle Maintenance
  • one for Manufacturing Equipment Maintenance

I do not use the numbered accounts so there are no numbers to specify in my case.

The accountant really dictates how they want things divided out.

BKM


#3

thks, but that wasn’t wondering about where to put the expense accounts in the CoA Hierarchy but more about the “Account Type” and the implications of using the build in account Type “Expenses included in asset Evaluation” compared to just choosing “Expense” as Account Type.


#4

I get it.

If you include the expenses of maintenance during the course of the year into the “Expenses included in Asset Evauation” then it is a little harder to later break out individual machine expenses later to evaluate the total cost of maintenance for a given piece of equipment.

That is why I track it all in separate accounts. I can look at (and filter) ledger entries for any given machine and get a better idea of which machines are costing me more to maintain. This helps in making machine replacement decisions.

The accountant can add the separated values together at the end of the quarter (or year) when it comes to tax records around expenses. By keeping it separated during the year it is easier for me to figure out quickly how machines are performing.

BKM


#5

that sounds a bit as if you had an expense account for each asset (which contradicts your previous statement a bit). Is that what you mean/recommend?

This still would not 100% answer the question whether the "Account Type" for that >indirect cost of sales >production machinery maintenance >machine1 account should be "Expense or “Expense included in Asset Evaluation”.

Or am I misreading something here?


#6

Not at all. Everything goes into one equipment maintenance expense account, but each expense is also tagged with the asset number of the asset. In the ledger report you can filter by the asset number. That makes it much easier to track expense per machine.

Everything is kept in Indirect Expenses under a separate account for all machinery expenses. that account can later be sorted by asset number if I need to know what it is costing me to keep a machine alive.

I can allocate the total of the account to anything I need to at a later time based on how the tax rules change. If you live in a location where it never changes, then you may want to be more specific about how to catagorize an expense as it is incurred, but you tend loose some of the flexibility of finding the expenses related to a single asset later when you do it all in one lump as part of the asset valuation. I just find it harder to break out the information I really need to evaluate against a particular machine by doing it your way.

Sorry if it doesn’t make sense to you. It may be more about differing accounting laws in different locations.

BKM