Expensing Credit Card Payments Monthly instead of at purchase?

Question

I opened a zero percent interest credit card at a retailer to make a large purchase.  I still want to have the debt listed so I set up the account.  However, instead of recognizing the original purchase as an expense, I would like to categorize the monthly payments as an expense but still lower the balace.  Any ideas?  Or just keep them completely separate?

Frankx · Answer

@Rich_M

What's the "life" of a $2,000 large screen TV?  Is it less than 1 year - no.  Any asset that us not "used up" in a year can be (and should be under GAAP) capitalized.

Frankx

Rich_M · Answer

@Frankx The post says he made a large purchase at a retailer ... I don't know anyone who has purchased a home at Target ... I would not classify any retail purchase as an asset.

I would wait until the poster clarifies what his large purchase was.

Frankx · Answer

@Rich_M,

If you purchased a home using a credit card - have you "incurred" an expense "the day you made the purchase"?

No, you have paid for an "asset" using debt.  It doesn't matter whether the debt is a mortgage or a credit card - what matters is whether the "character" of the item purchased is an asset (something with a life of a year or more), or an expense (an expenditure that is used up in the current year).  BTW I am using ordinary every day language here for the sake of clarity.

I suspect that a "large purchase" (to use the OP's terminology) will have a useful life of a year or more, therefore his question/concern is clearly not "completely incorrect."  And your reference to that excellent article by Quicken Natalie is not relevant, because it only discusses handling of credit card debt, not the assets or expenses that were the origination of said debt.

Frankx