Projects - Sales Tax & Capitalizing

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Posted on by ian2buckz

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Hello,

I currently have a project that is classified as project type investment. There are a few POs that have been fully received/invoiced associated with this Project.

When I go to the header tab -> Manage -> Estimates and create an estimate, I notice that while reviewing the 'Consumption' tab the sum of all POs appears in the 'Consumption' field.

In the Capitalized field is the sum of the totals of all of the items purchased on the purchase orders (excluding tax). In the Not Capitalized field contains all of the sales tax for the project purchase orders.

Is there a way to have the sales tax included in the capitalized values?

1401.project.png

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Ludwig Reinhard Microsoft Employee on at

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Hi,

In the elimination totals tab you should be able to edit the amount the be capitalized.

What amount do you see there?

Best regards,

Ludwig

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ian2buckz 105 on at

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Ludwig,

I do not see an elimination totals tab. I have a totals tab, which is shown below:

Is it because the project is ~98% complete that I cannot edit these values?

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Ludwig Reinhard Microsoft Employee on at

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Hi,

Thank you for sharing this screenprint. There I can identify that $10930.30 shall be capitalized. The consumption tab says that $10541.80 shall be capitalized. Do you know what makes up the difference that is not capitalized ($388.50)?

About your sales tax:

Do you apply a VAT tax regime where you will get a refund from the supplier or government for the VAT? If this is the case the VAT should not be included in the capitalization. Can you elaborate on that and provide some additional explanatory notes?

Many thanks and best regards,

Ludwig

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ian2buckz 105 on at

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Ludwig,

Thank you for the timely responses.

I am unsure what exactly makes up the difference of $388.50, I am looking for that portion now.

In regards to tax, there is not VAT regime assigned. We do not have any complicated setups with tax, mostly relying on Avalara to conduct all of the transactions. This is our first run at creating an estimate for a project.

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ian2buckz 105 on at

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Ludwig,

Budgeted cost on the project is $11,800. Actual cost is $11,411.50, leaving a $388.50 variance.

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Ludwig Reinhard Microsoft Employee on at

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Hi ian2buckz,

Thanks for that update.

The VAT or sales tax that you post is that recorded as an expense?

If it is not expensed but rather treated as a balance sheet item - as we do it here in Europe - you won't get this included in the estimate directly but would have to make use of a workaround.

Can you let us know how the tax for the POs was actually posted?

That is can you share the vouchers created and also the transaction origin of those vouchers?

Many thanks and best regards,

Ludwig

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ian2buckz 105 on at

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Ludwig,

The ledger posting group for sales tax is associated with a liability account.

In regards to the purchase order assigned to the project and the vouchers, here are some screenshots:

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Ludwig Reinhard Microsoft Employee on at

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Hi,

If the sales tax is treaded as a liability you won't get the costs into the estimate.

A possible workaround is recording a manual project expense transaction.

When doing that the question arises what account and offset accounts to use for that purpose.

If this is only for internal purposes, you can use statistical accounts for the debit and credit transactions.

However, I am not familiar with the details of your tax setup and whether this is something that is allowed in your country.

Before making those 'adjustment' / expense postings double check with your accountants and tax advisors if this would be ok.

Best regards,

Ludwig

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ian2buckz 105 on at

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Ludwig,

Would that still be the case if the $869.70 was posted to 150700-OPS-40250- as the 150700 account ias classified as an asset?

I am unsure if the ledger posting group is associated to this transaction, so I am referring to subledger journal entry where the sales tax amt is debited to the asset ledger acc.

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Ludwig Reinhard Microsoft Employee on at

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Hi ian2buckz,

I think the fact that findims are posted in combination with 150700 - which is a balance sheet account - does not make any difference. You have to get the $869.70 somehow recorded as a cost on your project to become able including those costs in your estimate.

Best regards,

Ludwig

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