Every now and then it may happen that you need to buy something additional to an existing asset. It may either need an upgrade or addition to it, doesn\u2019t really matter, however there are a few things that need to be kept in mind when treating these additions.<\/p>\n
One obvious question is if it even meets the PPE definition criteria? Are you using it for more than 12 months? For an example paper to the printer is not a PPE item although it is needed for a printer to actually do what it\u2019s meant to do. So prior to making the recognition, do think if the addition in essence is a PPE item? Is it going to be used to create revenue or decrease expenses? Will any future profits or benefits run into the company from using it?
\n
\nAnother crucial question that is sometimes forgotten is: Is it perhaps a separate asset? May it be a PPE item on its own? <\/p>\n
When your answer to first one is \u201cyes\u201d and to second one \u201cno\u201d, then you are dealing with an addition to an asset. It shall be added to the cost of the existing item and as such, the entries are as follows:<\/p>\n
Db PPE class<\/p>\n
Cr Payable to supplier<\/p>\n
With this the assets value has increased on the balance sheet and the only addendum you need to make to the PPE information card is essentially the cost value.<\/p>\n","protected":false},"excerpt":{"rendered":"
Every now and then it may happen that you need to buy something additional to an existing asset. It may either need an upgrade or addition to it, doesn\u2019t really matter, however there are a few things that need to be kept in mind when treating these additions. One obvious question is if it even […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,33,55],"tags":[],"class_list":["post-2245","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-5-property-plant-and-equipment","category-1-5-3-subsequent-measurement"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2245","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=2245"}],"version-history":[{"count":3,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2245\/revisions"}],"predecessor-version":[{"id":2591,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/2245\/revisions\/2591"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=2245"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=2245"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=2245"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}