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So i bought a Gumball machine and paying via Klarna for 4 payments. How is the best was to categorize the transaction as it turns into a equipment asset?
Create the fixed asset account for the machine, and an associated accumulated depreciation account too
create a liability account for Klarna
journal entry
debit the fixed asset account for the machine
credit the liability account Klarna for the total amount
make your payments to Klarna and use that same liability account as the expense (reason) for the payment
Just an FYI - it is not necessary to record the purchase as a fixed asset if the cost is less than $2,500. This is what's known as the IRS de minimus capitalization threshold. You can expense it fully in the year it is put into service.
So should I be tool,plant and equipment right? That’s what I have my vending machines classified as
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