Built to last,
counted to last
A chicken house, a water tank, a motorcycle. Bought in March, used for years. Filed as an expense, it makes March look like a disaster and every month after it look free. Capital Costs keeps those purchases apart from spending, so this year's investment is not this year's loss.
Layer house for 1,000 birds: bricks, iron sheets, timber and the fundi.
A solar water pump. Later added to Assets & Equipment so its servicing has a home.
Spread over five years and less the 200,000 it will still be worth. That is its real monthly cost.
Used up, or kept?
One question decides it: will this still be on the farm, working, next year?
If it is used up in a season, like feed, diesel, a vet visit or seed, it is an expense. If you build it or buy it to keep, it is a capital cost. The difference matters because Reports' profit adds up expenses: put a 6,400,000 house in there and the month you built it shows a loss the farm never really made.
Expenses
- Feed, drugs, vaccines
- Diesel and airtime
- Labour and repairs
- Seed and fertiliser
Capital Costs
- Houses, sties, stores, fences
- Tanks, boreholes, irrigation lines
- Pumps, incubators, a motorcycle
- Bags of cement and iron sheets that went into them
One line per thing, or per material
Give it a name, a date and a category. For many of one thing, such as 120 iron sheets or 40 bags of cement, fill the unit, the quantity and the unit price and the total works itself out, or type the total to get the price for one. A big build is usually several lines: the materials and the labour, each in its own row, all in one category.
Capital Asset Categories is where those groups live, such as Construction Materials and Tools & Equipment. Add your own, and deactivate one you no longer use rather than deleting it, so the old entries keep their label.
What it costs each month it works
Spread the price over the years it will last, and see what it is worth today.
A machine you want to look after, with services, repairs and fuel, goes on to Assets & Equipment. Tap From purchases to pick it from your capital costs rather than typing it again. Two answers there turn a price into a monthly cost: How many years will it last? and Worth at the end.
Famu spreads the difference evenly, month by month, and shows Worth today. It stops at the end of the asset's life, so an eight-year-old pump meant to last five sits at what it is worth at the end, never below. Leave the years blank and Famu shows "—" rather than inventing a figure. Try it.
The rules
Monthly, not daily
"About five years" is a guess, so depreciation is counted in whole months. A daily figure would claim a precision nobody has.
It stops when the thing leaves
Set an asset to Sold / disposed, with the date, and its depreciation stops that day.
Nothing stored, nothing stale
Worth today is worked out each time you look, from the price, the life and the date, so there is no figure for a nightly job to forget to update.
Who can do what
By default an admin can do everything. A manager can see and add capital costs. Workers do not see them, though they can see the machines themselves on Assets & Equipment, without prices.
Your accountant sees them apart
The accounting export files capital costs as capital items, separate from allowable expenses, in its tax summary.
Kept apart, not yet spread into profit
What it does not do yet
Reports' profit does not take a monthly share of your capital costs off yet. It leaves them out entirely, which is fairer than charging them all at once but still flatters the farm a little. The asset's own page shows its monthly cost and its worth today.
The years and the end value are your estimate. They are not a tax depreciation schedule; your accountant may use different rates.
Earns its keep for
- Farms building houses, sties or stores
- Tanks, boreholes, irrigation and solar
- Knowing what the farm owns, and what it is worth now
Does little for
- Small tools that wear out in a season: record them as expenses
- Land, which does not wear out