Solar panels on interest free

Kylie Hough

Pretty please - I just purchased solar panels on 5 years interest free with Zip Money. How do I enter this in as a long-term liability? Its an easy question I'm sure but I just don't buy things in my business :-)

Acctd4

Create Zip Money as a “Credit Card” & make the purchase as normal using that - either via “Enter Credit Card Charges” or by using the Zip CC to pay the Bill. Then your repayments are via a “Write Chq” posting back to the Zip CC (NO tax code on the repayments!)

Don’t forget to enter any fees (via “Enter CC Charges) with NCF tax code.

Kylie Hough

That's how I set it up but my accountant told me that as it is for more than one year repayment term it needs to be listed as a long term liability. What do you think?

Acctd4

I understand where he’s coming from as yes, that is technically correct but for ease & accuracy of transactional entry & tracking, it makes sense to set it up this way as - in RA - you can’t make a “repayment” from a long term liability account.

The balance could be journaled to a LTLA at 30 June each year then reversed back again on 1 July, if the accountant prefers to see it that way?

Bruce

To be super technical, the amount to be repaid in the current financial year should be a current liability and the balance as a long term liability.

My typical approach is to treat all amount due as current and to then let the tax accountants earn their money by having them provide re-allocation journals each financial year.

Acctd4

@Bruce If you happen to pay more than the minimum though, that can be a bit more tricky to determine but I agree 😊

Bruce

If you pay a bit more there is no reason the current liability can’t go negative by year end. Again let the accountant clean it up

Acctd4

The reason I like using a CC account is so that it can be reconciled but this can’t be done if you split the amounts over multiple account types 😬