* Please note that Pool Assets are specific to Australian XPA users only.
How to account for Assets with Cost Limits that needs to be transferred to a Pool.
When transferring assets with cost limits into a pool, a suspense amount is created.
Example:
From an Accounting Perspective the asset will be depreciated at full cost of the asset - $90,000 (e.g. Diminishing method).
From a tax Perspective, the asset will only be depreciated at the Cost Limit - $57,009.
Say this asset needs to be transferred to an STS asset for tax purposes.
As can be seen, only the $57,009 depreciable component of the asset is actually transferred to the pool.
The $32,991 non depreciable component is then transferred to the Asset Suspense.
From here, Users have two options to address this balance in Asset Suspense.
Option 1: NEW PSEUDO ASSET POOL (ASSET that acts like a POOL)
Create another Asset – to which the non depreciable component of an asset can be transferred to.
Note 1: Ensure that this asset is added to a group that maintains Tax Ledgers only, and that the asset’s depreciation rate is zero. You will notice in the screen shot above, the Book Value tab is inactive.
Note 2: In this example, the pseudo asset pool is grouped with the STS General pool. Users may choose another group, as long as the requirements in Note 1 are adhered to.
Create an addition to the newly created pseudo asset pool as normal.
In this case, create an “Adj/Addition” to the pool equaling the amount of the non depreciable component of the asset - $32,991.
Option 2: NEW ASSET GROUP
Create another Asset Group – to which the non depreciable component of an asset can be transferred (added) to.
Note 1: Make sure that ONLY the Tax Ledger is maintained. This way, for all assets created to account for the non depreciable components of assets transferred to a Pool, they are not printed in the Book Schedule. Reason being, from an Accounting perspective, the assets have not been sold nor has it been transferred to a Pool. The STS Pool system is only for tax purposes. Having the non depreciable component assets appear in the book ledger will mean a double-count of all amounts exceeding the cost limit – i.e. the Book schedule will be overstated.
Note 2: Ensure that the depreciation rate is zero. This will guarantee that all assets added to this asset group will have a default depreciation rate of zero.
Add an asset for every non depreciable component that must be accounted for.
To avoid confusion, ensure that asset descriptions are clear and concise.
In this case, create an asset with an Initial cost equaling the amount of the non depreciable component of the asset - $32,991.
For the asset(s) added, ensure that the depreciation rate is zero, and Acquisition Date equals that of the original asset(s).
Option 1 vs. Option 2
For both Options, the balance in account 970 will be accounted for.
More importantly, for both options, the Book and Tax Schedules will maintain their integrity. This is ideal for users who maintain both Book and Tax schedules independently.
The only difference between the options is in the presentation of the balances in the schedules.
For Option 1, the non depreciable component(s) of the asset(s) can be grouped with the STS asset – though not necessary. Also, one pseudo asset pool for non depreciable components of assets can be used for many assets.
For Option 2, the non depreciable component(s) of the asset(s) will belong to a separate asset group. A new asset must be created for every asset with a cost limit that is transferred to a Pool.
For both options, the Book schedule will show no difference in its balances.
* The same logic articulated in this article can be used for an asset with a Private Use component. Simply Enter the Private Use Depreciation Rate in the relevant field.