Should the purchase of an asset count towards the monthly net profit of a company?

We operate a network of websites and from time to time we purchase other websites to add to this network of sites. At this point our company is profitable and we do monthly distributions to each partner based on net profit each month. We also have a pool of cash in reserve for these types of purchases.

Recently the question was asked which is: If we purchase a website from our pool of reserve cash on hand, should this count towards the net profit for the month the asset was purchased in or can we say that the asset was purchased from cash on hand w/o affecting the monthly net profit? The partners want to know if their monthly distributions can stay unaffected and not cause an accounting problem if we say that the asset was purchased from cash reserves already on hand.

The cash reserve should have a clearly defined purpose or purposes. For example, if the cash is defined as being solely for investment in the company, then it can be written off as an investment (which it is, assuming you want the site to at least return your investment plus some).

Remember, that the profit is

What's taken in above what was spent

So if the reserve is already there, it cannot be profit by definition, and should not affect your net profit distribution.

From an accounting perspective, and from a tax perspective, when you purchase an asset that will last longer than one year, you cannot deduct the cost of the asset, so, no, it does not reduce your profit.

Example: You take in $1000 in revenue and purchase a desk for $700.

Nothing else happens at all, there are no other expenses or purchases.

In this case you only have $300 in the bank, but the desk cost $700 but it lasts more than 1 year, so you can't deduct it. How much profit did you make?

You can depreciate the asset that you purchased over its lifetime. The IRS might have rule about how much you can depreciate it every year. In the case of furniture that's usually 7 years. So you can deduct $100 each year for the first 7 years of its lifetime.

So.. in the first year, you have $1000 in revenue and $100 in depreciation expense, so your net profit is $900. You only have $300 in the bank.

IN YOUR CASE, the cost of the asset should be deducted over the useful lifetime of the asset, not in the year in which it was purchased.