Solar panels on interest free
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 :-)
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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.
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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?
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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?
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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.
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@Bruce If you happen to pay more than the minimum though, that can be a bit more tricky to determine but I agree 😊
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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
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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 😬
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