296 Other Investments and Miscellaneous Assets

Assets

Other

Synopsis

Account 296 is established to record the amount of Other Investments and Miscellaneous Assets owned by the dealership.

Debits

Credits

  1. The Cost of securities acquired which are intended to be retained as long-term investments (stocks and bonds)

  2. The Cost of securities acquired which are not of a readily marketable nature (stocks and bonds)

  3. The Cost of real estate not used in the operation of the business

  4. The Cost of club memberships 

  5. The Cost of miscellaneous assets not intended for resale

  6. The Cost of investments in subsidiary and affiliated enterprises

  7. The Adjustments for net profits of subsidiary and affiliated enterprises whose net equity is recorded in this account

  8. The Cost of investments in purchasing cooperatives

  9. The amount of organization expense if capitalized

  10. Deposits on contracts as a guarantee of performance

  11. The amount of items of expense paid in advance relative to these assets

  12. The Cost of other assets acquired

  13. Goodwill

 

  1. The monthly provision for depreciation

  2. The expired portion of items of expenses paid

  3. The Writedown of securities to market value

  4. Deposits returned

  5. The book value of assets sold and otherwise disposed of

  6. The Adjustments for net losses of subsidiary and affiliated enterprises whose net equity is recorded in this account

 

Example 1

Record the investment in a new subsidiary in the amount of $2,000,000.

Journal: Cash Disbursements

Entry:

 

Debit

Credit

Account 296

Other Investments & Miscellaneous Assets

$2,000,000

 

Account 202

Cash in Bank

 

$2,000,000

Example 2

Record the reclassification of the $15,000 deposit on a new telephone system to the purchase price of $175,000.

Journal: Cash Disbursements and Purchase

Entry:

 

Debit

Credit

Account 284

Furniture & Fixtures

$175,000

 

Account 202

Cash in Bank

 

$160,000

Account 296

Other Investments & Miscellaneous Assets

 

$15,000

Comments

A debit balance represents the book value of assets not used in the business and not otherwise provided for.

Note:

1. Cost of assets should include additional items such as:

 

a.      Expenses incidental to securing title

b.      Installation and construction costs

c.      Freight

d.      Sales Tax

 

2. A detail of these assets should be made in this account or in a suitable subsidiary record.

 

3. Income and expenses relating to these assets should be recorded in Account 905, Other Income or Account 955, Other Deductions, as applicable.

 

4. Sub-accounts should be created to record each investment or asset separately.  This should be done to facilitate administrative control over the items that are included in this account.  Professional tax and accounting advice should be obtained regarding the depreciation, write-down or liquidation value of these assets.