Charity cleint has charged full cost of asset to a fund stating this is what the fund was earmarked for. Surely it should be charged to ixed assets and the fund depleted via the depreciation charge?
Jonno
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correct
You are correct but the client's viewpoint is very common because he (and a great many other people) will look at the accounts and see that there is still a balance on the fund accounts and think that it still has funds (ie money) to spend.
Accountants have really messed up on the terminology, with funds meaning money but not always.
further clarification
Can I ask for further clarification as we may be doing something incorrectly.
When money is collected for a specific purchase surely the balance of the fund in which that money is stored ought to drop by the same amount as the purchase.
For example if we were raising £10,000 for a piece of equipment we might set up a fund so as to monitor the progress of the campaign and to separate from other funds. When this equipment is purchased it is recorded as a fixed asset purchase and the money is also deducted from said fund.
If we left the amount in the fund and depreciated the amount we would have both the fixed asset and the money reflected on the account.
What should happen?