Quicken reports

Posted by Stubby on January 29, 2010, 9:25 am

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I'm confused about how to enter transactions that I want on two
different reports.   For instance, I had my driveway replaced.   That
should show up both in checkbook (i.e., income/expense report) AND in
the home improvements account where it finds its way to my net worth
report.  I'm hung up trying to figure where to enter the transaction
and what its category should be.  Can some one set me straight on
this?  TIA

Posted by Tim Conway on January 29, 2010, 9:42 am

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You can customize your reports to include any categories or accounts you
want. Just categorize the tranaction so it will be included in the reports
you want.

Posted by Robert Neville on January 29, 2010, 10:03 am

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The transaction in your checking account should be a transfer to the asset
account, not allocated to Home Imp.

Posted by R. C. White on January 29, 2010, 10:30 am

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Hi, Stubby.

Your driveway replacement question falls squarely into one of the grayest of
the gray areas in accounting:  "Repairs" versus "Improvements".  :^{

The theory is clear enough:  If the project adds something new and valuable
to your property, then it is an Improvement and the expenditure should be
added to your property's cost in your books.  If the replacement simply
brought the property back to its original condition, then it is a Repair, or
Maintenance.

But from that clear theory, Real Life takes many twists and turns and we
often must be clairvoyant to choose which expenditures belong in an Asset
Account (such as Residence) and which should be in an Expense Category (such
as Driveway Repair Expenses).  And a single expenditure must sometimes be
allocated between them.

If all you did was remove the old driveway and construct a new one to
essentially the same specifications, then the entire expense was a repair of
your property, restoring it to its original state and repairing wear and
tear sustained over the years since you acquired the property.

If you removed a thin, narrow driveway and replaced it with a thick, wide
driveway with a lot of extra strength and capacity, then you should
"capitalize" the cost and add it to what you paid for the property
originally.  Of course, you should also try to determine how much of that
original cost was for the original driveway and deduct that cost from your
purchase price - and that is not always as easy in practice as in theory.

If you did not acquire the property when it was new, and if the driveway
already had cracks when you bought the place, then the calculations might
get even more complex - but we've gone deep enough for today.

As stated so often here, DO NOT confuse Cash Flow with Income/Expense.  Many
checkbook transactions don't affect income or expense at all, such as when
we borrow money or pay it back.  Or when we buy a new car or other asset.

Once you've decided whether the driveway replacement is a Repair or an
Improvement, your accounting choice should be self-evident.  In either case,
the entry should be in your checkbook -  your Bank Account in Quicken terms.
If it was a repair, then charge it to a Category, such as Driveway Repair
Expense; this will affect your personal Income/Expense Report for the year.
If it was an Improvement, then add it to your Residence Property Account -
an Asset Account in Quicken-speak; this will not affect income or expense,
but will add to your Net Worth (net of any amount you remove for the cost of
the old driveway).

All I know is the theory, Stubby.  I can't help with the facts of your case.
:^{

RC
--
R. C. White, CPA
San Marcos, TX
(Retired.  No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Using Quicken Deluxe 2010 and Windows Live Mail in Win7 x64)

Posted by Arnie Goetchius on January 30, 2010, 9:53 pm

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R. C. White wrote:

In New Jersey, the state taxation department would describe that as an
"exempt capital improvement" as outlined on page 2 in the following:

www.state.nj.us/treasury/taxation/pdf/pubs/sales/su2.pdf

You may be technically correct but contractors and homeowners in NJ like
to call it a capital improvement so as to avoid paying the 7% sales tax.