As the head of an association, you know that investments are an essential part of accounting management. You need to identify these assets (fixed assets and investment grants) in your association accounts, as they will support your activities on an ongoing, long-term basis, without being consumed as soon as they are used up.
Managing fixed assets in your association
Within your association, you are often faced with the management of long-term assets, known as fixed assets. These assets, whether intangible or tangible, include any identifiable item capable of generating future economic benefits and controlled by your association. The cost of these fixed assets must be accurately assessed.
The acquisition of a fixed asset increases the asset value of your association, without constituting an immediately deductible expense. For optimum management, you can set up a detailed tracking file with information such as the description, acquisition value, depreciation terms and disposal date of the assets concerned.
In accounting terms, when you purchase a fixed asset, you debit the correct fixed asset account and credit the supplier account. When the invoice is paid, you balance the supplier account by debiting the bank account.
Let's take the example of the purchase of computer equipment by an association. There are two stages in the accounting process: recording the invoice, then payment. First, you debit the corresponding fixed asset account and credit the supplier account. Then, when you pay the invoice via your pro association account, you credit the bank account and debit the supplier account.
Fixed asset depreciation is calculated on the basis of depreciation and spread over the probable useful life of the asset. You can choose between straight-line depreciation, with constant annual installments, and declining-balance depreciation, with decreasing annual installments, often subject to special tax conditions.
Accounting treatment of investment grants
Investment grants must be distinguished from operating grants. Whether public or private, they are recorded differently in your association's accounts, depending on whether they are allocated for renewable or non-renewable assets. Grants are accounted for in accordance with the general chart of accounts, and are written back to the income statement at the same rate as the depreciation of the investments financed.
By understanding and applying these principles, you can ensure efficient and transparent management of your association's resources, strengthening its long-term financial stability.