Re: Expensing an item in inventory

["Chris Travers" <..hidden..>]

On 10/29/07, Robert Fraser <..hidden..> wrote:
> Hi
>
> Can someone tell me how we can expense an item of inventory if we end up
> using it within our business.

I think that this sort of question is going to get a lot more
attention as we move towards 1.4 and start looking at fixed asset
accounting functionality.

>
> As an example, say we buy 10 yhard drives.  These get entered into the
> inventory, and the inventory is adjusted as we sell them to customers.  We
> sell 9 hard drives and use 1 hard drive in one of our busniess's servers.
> How do we make this last hard drive a business expense and make sure that
> the inventory is still reduced by 1 item?

Do you need to depreciate the hard drive?  If not, just create a dummy
customer (maybe "internal use" and sell it to that customer at a 100%
discount.

If you do, then it becomes more complex.  Thinking through this-- I
would create a new asset account that is a summary AR account for
asset conversions.  I would then sell it to yourself at cost and
record in that AR account.

Then you can use various GL transactions to move the money around for
depreciation.
>
> I assume we could invoice ourselves, but this doesn't feel quite right.
> IANAA, so I'll admit some clueless-ness up front ;-)

We certainly need a better interface for this sort of issue, but yes,
it comes down at the moment to invoicing yourselves.  The specifics
however may depend on whether this is a capital asset or not.

Best Wishes,
Chris Travers