Some expenses can be shared by two companies like rent, electricity, or Internet, say, if they are occupying one office space. These expenses are subject to VAT and billed to only one company. If you are using manual accounting, you can easily proportion the charges and VAT, then collect from the other company its due share. However, if you are using MYOB, there may be a slight problem. You can allocate the amount as expense of the collecting company and the other portion as receivable from the other company; but you cannot allocate the VAT portion as receivable from the other company.
Eventually, your VAT report should still reflect the amount in full.
My portal to just about anything
Let's look at the manual methodIf you are using manual accounting, you can record the transaction this way, assuming you're using the cash method.
- To record the rent expense in full
- To allocate the sharing of the rent, debit the VAT portion to a contra account of Input VAT. This is to ensure that your Input VAT always reconciles with the VAT you remit to the BIR.
|Due From Company B||2240||Rent Expense||2000|
|Input VAT Shared||240|
Recording it using MYOBThe trick is to create a new account which is a contra-account of Input VAT. Why is that? The reason is that your VAT report (that is generated by MYOB) should reflect the correct principal amount (or purchase value) and exact VAT paid. Using Spend Money, your entries should look like this.
|Click to enlarge|