 In this presentation, we'll discuss the recording of property plant and equipment or depreciable assets both through a donation of property plants and equipment that we'll be using in the not-for-profit organization versus us purchasing property plant and equipment. Get ready because here we go with zero. Here we are in our not-for-profit organization dashboard. Let's first take a look at our Excel worksheet to see what our objective will be. We're over here on tab number seven, working on tab number seven. We're going to be down here on number five where we have the purchase of equipment and the donation. Let's take a look at our little description over here where it says purchase office equipment for $13,000. It's got a four-year youthful life. We'll talk about that later or we'll use that later when we think about the depreciation methods. We have the fair value of $11,500 of donated property and it has a 10-year life schedule. This is going to be the comparison. First, we're going to talk about us just purchasing and we're the not-for-profit organization. We're going to purchase equipment and then we'll go into the idea of, well, what if someone gives us equipment that we're going to use in the not-for-profit organization? All right. First, purchasing side of things. Purchasing side of things, standard kind of transaction that you might see in a for-profit organization for the purchase of property plants and equipment. I'm going to highlight this and make it green so that I can focus my attention on it. I'm going to make it green. I focus on the green stuff. We're going to say then that we're going to say cash is going to go down. Obviously, if we buy property plants and equipment, cash is going to go down. The other side then is not going to go to an expense. That's going to be the difference. That's the difference here happening. We're going to put it to the balance sheet account, which is going to be property plants and equipment. Why? Because it's going to be a long-term type of asset and under an accrual basis. Even if we're using a cash basis, we're going to use it for a long period of time so we would have to basically deviate from just expensing it even under a cash basis typically because this would be a big distortion. Therefore, we're going to put it on the books as an asset and then we will expense it with the use of depreciation. What's that going to look like in our records? We're going to say our cash is going to go down for that one. Cash goes down and the other side is going to be increasing the furniture and the fixture. No effect then on the income statement accounts. No effect down here in these dark blue accounts down below. Let's first record that. Let's go back on over to zero and we could do this with simply a money out type of form. We're going to select the drop-down. We're going to say that this is going to be money spending. We're going to spend money for furniture for not-for-profit. Then we're going to go into the checking account. We're going to go into the checking account and say that next, and then we need who we're going to buy it from. We're going to say like office depot, let's say, we're buying it from the furniture and then we're going to say that the date, let's make it January. Let's go on back to January. Let's make it January the eighth, the eighth of January. Then we're going to go down and I'm not going to put an item. We're not going to be having an item and description. We could put purchase of furniture and then I'm going to say the amount was for that 13,000. Wasn't that 13,000? Pretty sure. So, 13,000. Yeah. 13,000 here and our journal entry down below that we're trying to mimic with our form is that 13,000. See? The green. The green help. We're going to go back over here and we're going to say that this is going to be the price 13,000. Now the account should go not to an expense, but property, plants and equipment type of account. So, we're looking for an assets type of account, a fixed asset type of account. So, here's the assets, prepaid, vendor, customer. So that we have here computer and equipment and vehicles have been set up for us. So I'm going to go with the computer and office equipment. Probably good. I'm going to rename it to like office furniture. We can do so. I would choose the account that they give us and then go back in and rename it if we need to. But that name seems appropriate to me. So then I'm going to say that we don't really need to classify it as restricted or unrestricted because this is going to be a balance sheet account. So it shouldn't matter whether it be restricted or unrestricted. What's going to happen when we record this? Well, it's a spend money form, cash then going down. The other side then go into the equipment account on the balance sheet. All right. So let's go ahead and record it and then we'll check it out. I'm going to say save over here and then all we really need is the balance sheet right now. So let's open up the balance. Let's open them both up though, just because balance sheet in the income statement, balance sheet in the income because we're going to need the income statement next time. So I'm going to open up the balance sheet here. So we'll open up the balance sheet and then I'm going to do our standard type of procedure. I'm going to be changing the date to the current date, which is 2020. And then we're going to duplicate the tab. So let's bring this out to 2020 January 2020 update that report, hover over the tab up top, right click on that tab, duplicate that tab, then go back to the tab to the left. We're now going to be opening up the income statement going to the accounting drop down favorite reports and our favorites is going to be the income statement. We will open that up. Once opened, we're going to be duplicating that tab. So I'm going to go up to the tab up top, right click on that tab. Once again, duplicate that tab. Let's go back and do this one more time. Back to the tab to the left, open up our worksheet report, accounting drop down. We're going to go down to the income statement worksheet reports. Income statement worksheet. If you don't have this report, we made it in a prior presentation. Good times. Great stuff. I'd recommend checking it out. So then we're going to go back up stop, right click on this tab, duplicate this tab. So now we've got our balance sheet income statement income statement worksheet and then a tab that we can do stuff with. Let's go back to the balance sheet now and consider what we have on the balance sheet. I'm going to hold down control, scroll up just a bit, bring it to that one, two, five. That's where I like to be at the one, two, five. And then if we scroll down, we can say the checking account should be going down. Let's open up the checking account and see that decrease in the checking account. I don't like the checking account going down, but we got some nice furniture, 13,000. I'm going to be doing not for profit stuff in comfort. So we got the spend money form decreasing the 13,000. Then I'm going to go back up top. I'm going to go back to the balance sheet here and the other side, the other side going to the computer and office equipment. There's the computer and office equipment. Now again, if we wanted to change the name and I want to call it furniture and fixture to kind of match our Excel sheet over here, we could say I want to call it equipment and furniture, let's say, then we can change that. They won't let me copy that. That's okay. We're going to go back on over. I'm going to go to the first tab then and we could change that by going, I'm going to hold down control and go back to a hundred percent. So whenever we manipulate or change anything here and not in the reports, typically want to be in a hundred percent, then you're going to scroll down to the accounting. Go to that chart of accounts and let's take a look at where that account will be and how we could rename an account. So if we look at all accounts, it's going to be under the assets or we could go to the assets tab here and just look at the assets themselves. They're already at the top. So it should be either one would have been fine, but let's go here. And then we're going to go into the computer and equipment. And I like to go over to the amount here. Actually, not the amount. We want to click the amount. We'll take you into this tab. This is fine. And then we'll edit this. So I'm going to edit. And then let's change the name to let's, they wanted it. We wanted it, not computer and office, but furniture, furniture. Furniture, because we actually made a got a nice couch that we have. We're going to have furniture and some chairs, furniture and equipment. So we'll save that. So we'll say save and that should be it. Now let's go back to the balance sheets and see if that then updates. We're going to go ahead and update the balance sheet and check it out. Then we're going to scroll back down and say, there it is furniture and equipment. So that's how you can change an account. Now let's go back on over. And we're going to go back to our income state or our Excel. And let's say, well, let's, we did that one. That's how we would purchase. That would be kind of straightforward for like a normal purchase for a for profit. What if someone just gives us the furniture? So they're going to give us the furniture here. So we'll take this one and we're going to make that green. So make this one green because that's when we're working on. And equipment and furniture goes up, but now it's a contribution that's been given to us. So it's going to be a contribution. We're going to use it in the not for profit. Organization. So we want to record it with a journal entry, increasing the equipment and then increasing kind of like our revenue account donations. They don't have restrictions because, and again, you might think, well, you gave us stuff that's kind of restricted. We'd rather have cash so we can do more stuff with it. But that's not the type of restriction. They didn't say you can only use the furniture in a fixture this way. That would be a kind of restriction. So so we could do whatever we want with the furniture in fixture, even though it's restricted in its form of, you know, the couch that we got or whatever. So now we're going to put it on the books. We also need to know what the fair value of it is. So we're going to have to somehow approximate a fair value calculation, a market price that it would be sold for. Typically, what would it be sold on a market for? And then we also want to put it on the books and be able to then track who gave us the money so we can track the donation. We can give a receipt of the donation and be tracking the fact that they have donated to us. So to do that, then we don't want to just do a journal entry. Notice there's no cash affected here. So typically you would have no form that we would use. We would use a journal entry, but we don't want to use a journal entry because we want to track the customer and and have the receipt and all that kind of stuff. So we're still going to use just like we did with basically the first transaction where we had the rent. We're going to do the same kind of thing we did with the rent transaction. We're going to record it with our normal donation form and then make an adjusting entry for it. All right. So let's take a look at what this would look like. We're going to go back to zero. We're going to go to the first tab. We're going to go to the drop down for the plus button. We're going to still say it's going to be money spend. So I'm sorry, receive money. It's going to be a receive money form. However, we're not going to put it into the checking account. We're going to put it into that clearing account because we didn't actually receive money. We just want to use this form to track the receipts and have a have a receipt form for them and track the customer payments or donor payments. So I'm going to then say that we want to put this into the cash clearing account and then say next. And then I'm going to say that this is coming from donor or I think I'm on three donor three. And then I'm going to say that this happened on what did we say January 7th? Let's keep it at January 7th. We'll keep it there. And then we're going to say this is going to be a donation. So I'm still going to use the donation item here. So I'm going to use the donation item and it's for the amounts of 11.5. Was it 11.5? Yeah, 11.5. So we'll say this is going to be 11.5. And then it's going to go into the contributions not restricted. That's what we want that was driven by the item. And then as far as the unrestricted and restricted classification, I'm going to say it's unrestricted. I'm going to put them into the fundraising. So when it's unrestricted, I'm going to put it into fundraising and then restricted. I have none on the restricted. We might go back in and adjust the restricted items later. So we'll talk about that later. So what's this going to do then? It's going to be increasing the clearing account, which we're then going to have to adjust. The other side is going to go into the to what we want, the revenue account. We're also going to be able to track the customer, the donor who gave us the money. We could provide them this receipt as a received payment form to show the donation that has been made to us. So let's go ahead and record this. We're going to say, all right, let's save that and check out what we have. So let's make sure we have a green thing. There's the green thing. So if I go back to the balance sheet, then back to the balance sheet and we update the report, we should then have an increase in the fixed assets. So if I scroll down, we're going to say, right, here's the the fixed, I'm sorry, not an increase in the fixed asset increase in the clearing account, 11 five, which we're then going to transfer to the fixed assets at a later point. So now clearing account is up. It needs to go back down to zero. So then on the income statement, if we take a look at the income statement and update that report, we're going to have an increase in the unrestricted items. So the two thirty seven thousand unrestricted. If I select that item, we can see that it went up by the eleven thousand five hundred. So that looks good. Then I'm going to go back to the income statement. Let's go back. Okay. So the next thing we're going to do is go back to the balance sheet over here. I'm going to go back to the balance sheet and we want to take this money out of the eleven thousand five hundred clearing account and move it into the fixed asset account. So let's go back on over to the first tab then and also just note while we're over here in the first tab that if I go to the contacts and look at all contacts, we're going to go into all contacts. We can then see the transactions for the donor. So if I went into, for example, donor three here, we could see the activity for donor three as a contribution. So we could see that contribution that has been made. And if there needs to be, you know, documentation on the contribution, we can record that and we probably should record in here in the memo that it wasn't money received that it was some other form of donation that we're using to receive money form in order to record. But the point is that we're doing it in such a way that we can track the donations that have been made, run a report to be able to track those donations that have been made and provide the feedback for them. OK, so then we're going to go to another form up top. Let's go to the plus form. We're going to say this is going to be a spend money form. Now we're not actually spending the money. We're just taking the money out of the clearing account and recording it where we want it to be, which is going to be the fixed asset account. So we're going to say this is coming out of the clearing account, the cash clearing account. And so we're going to say next. Then this is just a transfer. So I'm going to say miscellaneous on on the customer. You could call it just a transfer for the customer. You might name a customer transfer. And then I'm going to go back to say this is going to be the seventh that this is going to happen. And then we're going to say we could say transfer for non cash donation. And we could reference the customer probably would might be useful too. But in any case, we're going to say one and I'm going to be picking the amount, which is going to be the 11,500. So I'm going to say 11 five. The account is going to be that fixed assets type of account. So we're going to scroll down. We're looking for the fixed asset type of account, which we made furniture and equipment and then I'm not going to put it into restricted or unrestricted. These are both balance sheet accounts so that shouldn't matter in terms of the category. What's going to happen when we record this? The clearing accounts going to go back down to zero. The other side is then going to go to the fixed asset account increasing the fixed asset account for the fixed asset that was donated. All right, let's go save this and check it out. Let's make sure we get that green something green because that means OK, there it is. That means we did nothing terribly wrong. Nothing terribly wrong has happened. And then I'm going to hold down control, scroll up just a bit to that one, two, five and then update this report. So we'll update this reports and then scroll on down. We see that the clearing account has disappeared now because it's back down to zero. It's cleared. It has been cleared because it's a clearing account. It went OK. So then we're going to go down to the furniture and fixtures, the 24,500. If we go into that 24,500, we can see that it consists of that 11,000 five and that 13,000. So that looks that looks good. So that's going to be it for now. Let's get out of here.