Capital Purchases are for equipment, vehicle or leasehold improvements that are not part of the day-to-day operating costs. This would include items such as: photocopiers, computer equipment, office equipment, musical equipment, vehicles. For costs associated to building improvements and renovations please see Church Property for more details.
When at all possible, provision should be made in the yearly budgeting process to either plan for or cover the costs of necessary capital expenditures. For larger items, funds could be accumulated over a couple of years to help offset costs.
Accounting for Capital Purchases
When expenses are incurred for Capital Purchases the transaction should be recorded in either Furniture & Equipment, Computer, or Vehicle on the Balance Sheet and updated on the Master Inventory Listing. Changes to Capital Assets for the year are to be reported on the Year End Review Confirmation sent to the national office at fiscal year end.
For budgeting purposes, the church may choose to record the item as an expense during the year. This will assist the church council in determining actual costs and cash flow for the year. An adjusting entry will need to be made at year end to adjust the item into the account on the Balance Sheet for financial reporting.
All purchases and/or disposals of Capital Assets should be updated on the Master Inventory Listing for the church. A copy of the invoice should be filed with the Inventory Listing for future reference. See also Capital Assets
An updated Inventory Listing is to be included with the Year End Review Confirmation report sent to the national office at fiscal year end.
Sage Accounting Users