IMR, LMA, YMI not understanding this?

[Gerry Laughlin]

I really need some help on this. If anyone has noticed some of the CSSR advertising bills have been credited using sales IMR funds versus parts and service IMR funds, even though we asked to have them billed against the Parts and Service IMR. So anyway I talk to our accountant and as usual it's as if I am speaking French and he is speaking Spanish, he's not a bad guy, we just do not communicate well. He is trying to explain how the Sales IMR works in Accounting, and the more he talks, the crazier it sounds to me. He is pretty much saying that when we sell a car a certain amount is charged to us by GM and GM puts it into the sales IMR fund. OK got that. Some of the sums are "matched" by GM. This is where I get lost. A certain amount is debited to 26102 FACTORY REC-ADVERTISING for each car. Next we get an IMR DEALER CREDIT that itemizes credits for a lot of the advertising we have done, things like credits for Campbell Ewald mailers, cobalt charges, and in this case CSSR credits. But instead of the amounts being credited back to the original accounts where the charges were expensed, the whole IMR DEALER CREDIT is credited to 26102 in one lump sum. The accountant says it doesn't matter, because now the credit balance that exists in 26102 is showing as an asset. Well if he had credited the accounts that had originally been charged our cash on hand would show greater, which is an asset isn't it? Can somebody please help me understand the logic behind this? Or at least point me in the direction of where I can find an explanation of how this is supposed to work? I am not saying our guy is doing it wrong, but the whole thing seems wacky to me.
Thanks,
Gerry

[texaslp]

I'll try to help you later, I just typed a whole long answer and lost it.

[texaslp]

A lot of people find imr confusing and not everyone handles it the same. I'll tell you how we treat it which seems like it may be the same or very similar to how your guy handles it.

We assume that we will ultimately claim all of our funds so we record everything as income(or an offset to adv expense) in ac 64 at the time of the vehicle purchase. So then as we spend and claim the funds, it's really just a matter of cash flow. 26102 is a receivable. Actual expenditures are debited to adv expense ac 65. So the following shows the flow of transactions.

1. purchase a vehicle
dr 26102 500.00
cr 64 500.00

2. pay for a direct mail campaign and spend $350.00
dr 65 350.00
cr cash 350.00

3. Get refunded out of coop for the campaign
dr cash 350.00
cr 26102 350.00

Now you have $150 remaining in coop funds(cash).

The actual expenses do show up in 65 so you can see what you're spending, but it is offset by the credits in 64.

Hope this helps.

[Gerry Laughlin]

I am trying to figure out how you can credit 64 the $500. There is nothing in 64 on our statement.

[texaslp]

64 is a relatively new account so your dealership may not have changed their procedure.


BTW, very clever headline. YMI took me a minute.

[This message has been edited by texaslp (edited 03-04-2010).]

[Gerry Laughlin]

Tex,
I guess I am struggling with how would you get the vehicle invoice to balance when you are putting the 500. in 64. Is there somewhere that GM explains this? I have looked at the old standards of accounting and nothing is mentioned there.
Gerry

[texaslp]

The way we do it may not be by the gm book. I actually post the dr to rec and credit to 64 when I get the weekly coop summary, not from the factory invoice.

Anyway I'm not entirely sure how your controller is handling it. One concern is the he mentioned having a credit in 26102 which doesn't sound right.

It the credit isn't going into 64 or 65 they may be reducing the cost of the new vehicle, but it almost sounds like it's building up in 26102. If that's the case, seems like auditors would have seen that before.

Perhaps if you ask him to write out for you sample entries, like I did above it would help us both make sense out of it.

[JustBob]

I you have a recent GM Accounting manual around it should have an explantion of the Offical GM way to handle it. Although it reads like a dictionary/enclyclopedia you should be able to follow the "logic".
However that may not be the way it is being done in your dealership. Over the years I have seen so many variations on how this is handled I cannot remember the correct way.

I will try to get access to a GM accounting manual and make up some old fashioned T accounts showing how the transactions take place, but it may be a few days.

Once you have that in hand you can show the controller the correct way to post the transactions!!!! However do not expect your paycheck to be correct if you do this.

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Have a tremendous day
Bob Britting

[Gerry Laughlin]

Bob,
Have no fear, my paycheck hasn't been right in a very long time, it keeps getting smaller. Of course that could be because I keep pissing off the office manager.
I do appreciate the help guys.
Gerry

[texaslp]

I've got the gm manual, but it's even more confusing. I can't find anything in it that addresses the coop reimbursement.