Best Practice: How to Track Internal Charges to Increase Equipment Value

Overview

This guide outlines how to track internal charges toward the Equipment Inventory Account by setting up an equipment unit, configuring the related Expense Code, and processing internal invoices to reflect these costs towards the equipment unit.

1. Setting Up the Equipment Unit

1. Navigate to General > Equipment

2. Click on the + Equipment button at the top right-hand corner of the screen to add the new unit
   

Enter Equipment Details

On the Equipment Setup page, input the following information, at a minimum:

• Equipment Serial #

• Unit #

• Control #

• Select the Branch and Department that the unit will belong to.
  Note: The department selected determines which Equipment Inventory Account is associated with the unit, unless the Over-ride Inventory Account is populated.
  

Key Note:

• Ensure the Customer Owned checkbox is unchecked. When unchecked, the system recognizes this unit as internally owned inventory and not as a customer-owned asset.

• The GL tab on the equipment record provides a snapshot of the transactions posted to this unit’s Equipment Inventory Account, referencing the unit’s Control #. Remember, the Equipment Inventory Account is determined based on assigned Department unless the Over-ride Inventory Account is populated.

2. Configuring the Expense Code

Once the equipment unit is created, set up an Expense Code that will be used for internal invoices against this unit. Internal invoices will post to the designated Equipment Inventory Account that is setup on the expense code rather than Accounts Receivable.

Navigate to Expense Code Settings

1. Go to Settings > Administration > Expense Codes.

2. Click + Expense Code to create a new Expense Code
   

Configure the Expense Code

• Map the Expense Code to the Equipment Inventory Account.

• This Expense Code ensures that the invoice amount associated with preparing a unit are recorded against the Equipment Inventory Account rather than Accounts Receivable.
  
  

3. How Internal Invoicing Affects Equipment Value

When an Internal Document is invoiced using the Equipment Prep Expense Code, the invoice amount from the document is recorded against the Equipment Inventory Account.

Use Case

For example, if parts, labor, or other items are added to an Internal Equipment Prep document and then invoiced, the total invoice amount will increase the Equipment Inventory Value for the unit, capitalizing those costs into the value of the equipment.

Key Points

• GL Cost Tab
  The GL Cost Tab provides a concise view of transactions recorded in the Equipment Inventory Account associated with the department to which the unit is assigned. These transactions are filtered by the unit’s Control #.
  • The Control # is critical for tracking and categorizing the equipment unit across all transactions.
  • On an Internal Equipment Prep Document, the Equipment Unit must be assigned under the Service 1 Tab for the invoice amount to post correctly to that unit.

Example:

Disclaimer

Please consult with your accountant or financial professional to ensure proper configuration and compliance with your organization's financial practices when tracking internal charges and setting up Equipment Inventory Accounts. Users should verify the suitability of these instructions for their specific needs and ensure all financial entries align with their organization's accounting policies.