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Ask Dr. Fiona Chen Your Own Question
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 2123
Experience:  Former IRS Revenue Agent
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How do you account for purchasing a fixed asset in your

Customer Question

How do you account for purchasing a fixed asset in your annual operating budget?
Submitted: 8 months ago.
Category: Finance
Expert:  Dr. Fiona Chen replied 7 months ago.

I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

Expert:  Dr. Fiona Chen replied 7 months ago.

Dear Customer,

Generally speaking, capital projects and assets purchases belong to capital budget and not operating budget.

However, since you ask the question, you must have to have it in the operating budget.

In the operating budget, we need to follow the company or the organization's budget handbook's instruction and/or CFO office's instruction.

It is suggested that we put in under first the department which will need to the budget item, then, put it under specific budget group or item you see fit, for example, office or administrative expenses; or small equipment under maintenance and repair department, etc. Create a line item such as "New Equipment". Use the name that is following the requirement and guideline and easy to understand. It is best to be at the same place for all divisions involved. That is, to create a category just for assets. The order and the code of this category should be the same for all the department involved. Make it easy to observe so that the budget audience will feel comfortable that we are not hiding the items within the budget.

Please feel free to follow up.

Regards,

Fiona