Entering asset purchases

The van is different, though. It's an expensive purchase and won't be gone at the end of the first month. A good van will deliver value for years to come, so it makes sense to spread out its cost over time. That's the idea behind asset purchases.

When you enter an asset into your forecast, LivePlan will place its full value in your financial statements and then calculate the value it will lose (through amortization or depreciation) each month over its useful life.

If you plan to get a loan to pay for an asset (as in the company van example), be sure to add that loan separately on the Financing page. All we're doing here is adding the asset itself.

Note: Not all assets are covered here. Cash, accounts receivable, and inventory are assets too, but we address those separately in our forecast. Just focus here on long-lasting purchases like equipment, vehicles, or furniture. You can also use this feature to spread out the expense of annual contracts or other short-term assets.

Adding a long-term asset

A long-term asset continues to provide value for several years (like a company van, a building, or office equipment). For more details, see What is the difference between a long-term asset and a current asset?

1. In the Forecast Overview, click Assets:
   
2. Click Add Asset:
   
   

3. Enter a name or a short description for the asset:
   

4. Choose how you want to enter the asset. Will you pay a one-time amount for it, the same amount per month/year, or varying amounts per month/year for it?

   • If you choose One-time amount, enter the expected purchase price and purchase date:
     
   • If you choose Constant amount, enter how much you will pay for it (per month or year) and when that payment will begin:
     
   • If you choose Varying amounts over time, enter the amounts you'll pay and which months/years you'll make those payments in:
     
     
5. Under Type, choose Long-term asset and indicate the asset's useful life below, which will help LivePlan calculate the depreciation. If this asset doesn't depreciate, choose Forever (do not depreciate) at the bottom of the list:
   
6. Finally, if you chose One-time amount on the previous step of the overlay, you'll see an option that asks you to indicate whether you plan to sell this asset during the period covered by your forecast and, if so, when:
   
   Note: If you don't see this option in your overlay, it means that you chose a constant or varying payment for the asset in the previous step of the overlay.
   
7. Click Create Forecast Item. Your long-term asset will appear in the assets table:
   

Determining the useful life of a long-term asset

For more details on how to choose the useful life of an asset, see Depreciation and Amortization: Determining the useful life of an asset.

Adding a current asset

A current asset is used up within 12 months (for example, an annual service contract). For more details, see What is the difference between a long-term asset and a current asset?

1. Click on the Forecast Overview and then click Assets:
   
2. Click Add Asset:
   

3. Enter a name for the asset (or a short description):
   

   • If you choose One-time amount, enter the expected purchase price and purchase date:
     
   • If you choose Constant amount, enter how much you will pay for it (per month or year) and when that payment will begin:
     
   • If you choose Varying amounts over time, enter how much you will pay for it each month, as well as in the next two fiscal years:
     
     
4. Select Current asset and the length of time this current asset will provide value so that LivePlan can amortize that value. If you don't want to amortize it at all, choose the Keep at full value option at the bottom of the list:
   
5. Click Create & Exit. Your current asset will appear in the assets table:
   

Adding special types of assets

These articles offer instructions for entering some special types of assets:

• Entering a previously-owned asset for a start-up business
• Entering an asset purchase with a down payment
• How do I enter an asset that appreciates?
• Representing intellectual property in LivePlan
• Forecasting for new construction
• Entering a tenant improvement allowance

Editing or deleting an asset

To edit an asset:

There are two ways that line entries in the Forecast can be edited:

1. Clicking the Edit icon will open the details of the line entry and allow you to adjust from there.
   
2. If a line entry contains data entered with varying amounts over time you can use inline editing for the varying amounts from the Forecast's Table view.
   

You can find step by step details for editing your forecast entries in this article: How do I edit, delete, and copy forecast entries?

To delete an asset:

Forecast items can be deleted from two different places: from the forecast table or list, or from within the editor overlay when viewing a single forecast item.

• In the forecast (Table view): Click on the empty white space within the name heading cell of the item you want to delete, as shown in the example below:
  
  Clicking on the white space will bring up further editing options at the top of the forecast table. Select Delete and confirm to delete the forecast item:
  
• In the forecast (List view): Click on the three dots to the right of the forecast item you want to delete:
  
  Select Delete and confirm to delete the item from your forecast:
  
• In the editor: Click the More actions dropdown near the top-right of the forecast editor:
  
  Select Delete and confirm to delete the forecast item:
  

Where does this entry appear in the financial statements?

Assets fall under two classifications: Current Assets and Long-term Assets, and these two entries appear in different parts of the financials. Only the depreciation and amortization of an asset are listed in the Profit and Loss statement, as this is the only part of the asset considered an expense of daily operations. 

The amortization of a current asset will appear under Operating Expenses as Amortization of Other Current Assets in the Profit & Loss, as shown below:

The depreciation of a long-term asset will appear in the P&L under Depreciation & Amortization, as shown below:

In the Balance Sheet, a current asset will appear under the Current Assets heading as Other Current Assets, with its value decreasing month to month as the asset is amortized:

Long-Term Assets appear in the Balance Sheet as shown below. You can see the value of the assets and their depreciation on separate lines:

In the Cash Flow statement, both short-term and long-term assets appear as shown below. The value of the asset purchase appears as a negative cash flow, and the Depreciation & Amortization appears as a positive cash flow. This value doesn't mean depreciation is a source of income. Instead, the positive depreciation amounts are adjustments to the cash value of the asset:

A Gain or Loss from Sale of Assets line will appear on the Cash Flow statement under Net Cash From Operations if an asset is forecasted for resale. This represents the difference between the cash your company receives from the sale and the asset's book value at the time of sale. If the asset is on a depreciation schedule, any sale price above or below its depreciated value will result in a gain or loss, which will be recorded in the cash flow for the specific month and year when the sale occurs.

More on forecasting:

Preparing a forecast