Qs2 um en_12_asset_acquisition_to_dispose
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Qs2 um en_12_asset_acquisition_to_dispose

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Qs2 um en_12_asset_acquisition_to_dispose

Qs2 um en_12_asset_acquisition_to_dispose

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  • 1. Openbravo QuickStart 2 User Manual Chapter 12 – Asset Acquisition to Dispose v2.0.1 Permission is granted by Openbravo, S.L.U. to Openbravo Business Partners to modify (including adapt, translate and/or extend) and reproduce this work for internal purposes, and reproduce and distribute the original or adapted work to their clients having anactive subscription to the Openbravo Professional Edition, provided such clients are under obligations of confidentiality towards the Openbravo Business Partner and may not redistribute the work to third parties. All other rights are reserved Introduction ....................................................................................... 1 Abstract Business Process .................................................................. 2 Roles Involved .................................................................................... 2 Configuration ...................................................................................... 2 Asset Categories ................................................................................ 3 Step-by-Step....................................................................................... 3 Procuring an Asset.............................................................................. 3 Registering an Asset ........................................................................... 3 Defining Depreciation .......................................................................... 4 Time vs Percentage Depreciation ....................................................... 5 Amortizing the Asset ........................................................................... 5 Calculating Amortization ................................................................... 6 Posting Amortization ........................................................................ 6 Disposing of an Asset .......................................................................... 8 Disposing with no Residual Value ....................................................... 8 Disposing with Remaining Residual Value ............................................ 9 Accounting ........................................................................................ 10 Defining Default Accounts for New Asset Categories ...............................10 Defining Accounts for an Asset ............................................................. 0IntroductionThis workflow manages the whole life-cycle of an asset: • requesting an asset ◦ purchasing a product • defining the product as an asset • defining depreciation/appreciation of an asset • accounting for depreciation/appreciation on a yearly or monthly basis • disposing an asset
  • 2. Keep in mind that not all processes are explained here since other processes are tied in,such as Procure-to-Pay.Abstract Business ProcessThe abstract asset acquisition to dispose is defined by the following business processdiagram:The following sub-processes form it: • Procuring an asset • Registering an asset • Defining depreciation/appreciation rule • Amortizing the asset • Disposing of an assetRoles InvolvedThe following roles are involved with this process: • For Procure-to-Pay, see the corresponding chapter • Finance - this roles manages assets in all aspects • Company Admin - used for configuration of certain elementsConfigurationBefore this process can be used, the following elements need to be configured first: • Asset Categories with accounting
  • 3. Asset CategoriesBest way to define accounting for different asset types is through definition of assetcategories. To create asset categories and configure their accounting properties, please usethe Financial Management || Assets || Asset Group window:Accounting is automatically inherited from the defaults configured within the [Defaults] ofthe Accounting Schema window (using the Company Admin role). However, you can andshould change it within the [Accounting] tab. See Accounting section for more details.Step-by-StepProcuring an AssetPlease refer to the Procure-to-Pay chapter for information on how to request and procure aproduct that will become an asset. Keep in mind that this step is optional. Assets can alsobe registered without having to purchase them first. However, if you want to tie an asset toa purchased product, make sure a product is first defined within Master DataManagement.Registering an AssetSwitch to Finance role. To register an asset, use the Financial Management || Assets ||Assets window and create a new record:
  • 4. Items to note: • Product - If a relation to a product definition (usually the one that was used to purchase the asset) is required, use this product selector to select it. • Asset Category - by selecting a mandatory Asset Category, this new asset will inherit the accounting properties of the underlying category. This accounting will automatically be entered into [Accounting] tab and can later be manually changed if required. • Depreciate - this checkbox will be used later to define the actual amortization parameters • [Asset Amortization] - tab where proposed amortization installments will be listed • [Accounting] - tab where specific accounting settings are for an asset, see section Accounting for more informationDefining DepreciationAgain, using the Finance role navigate to the Financial Management || Assets || Assetswindow and edit the asset previously created. Then, check the Depreciate checkbox toreveal a set of parameters required to define the depreciation:Fields to note: • Depreciation Type - currently, Openbravo ERP only supports Linear depreciation • Calculate Type - choice between Time and Percentage depreciation type • Amortize - if Calculate Type is Time, this field gives us a choice of monthly or yearly depreciation calculation.
  • 5. • Usable Life - Years (or Months in case of Monthly amortization) - the number of years (or months) to depreciate the asset over • Purchase Date - the date of purchase of the asset (optional field) • Depreciation Start Date - this date must be entered in order for the Create Amortization process to calculate the depreciation postings. (mandatory field!) • Asset Value - initial value of an asset (mandatory field!) • Residual Asset Value - value of the asset at the end of the depreciation period (if this value is entered, the Depreciation Amt. will be automatically calculated) • Depreciation Amt. - the amount of the initial value to depreciate (if this field is entered, the Residual Asset Value) will be calculated automatically • Depreciated Value - a read only field indicating how much of the depreciation value has already been posted to the general ledger. • Depreciated Plan - a read only field indicating how much value of the asset will be depreciated until the end of asset life. • Previously Depreciated Amt. - the amount that has already been amortized before the asset was entered into the system. It will be deducted from the full asset value upon the calculation of the amortization plan.Time vs Percentage DepreciationThe Linear depreciation type supports calculation over time or percentage.As shown within the screenshot above, Time calculation enables us to enter the number ofmonth or years over which the full Depreciation Amt. will be depreciated. The system willthen calculate yearly or monthly postings and enter them into [Asset Amortization] tab.The second option is Percentage calculation. The example above could also be depreciatedthis way:Fields to note: • Annual Depreciation % - the percentage of the Depreciation Amt. to amortize each year.Amortizing the AssetOnce the asset has been defined and the depreciation parameters entered it is time tocalculate the depreciation postings and post these to the ledger at the end of an accountingperiod (month or year).
  • 6. Calculating AmortizationTo calculate the amortization, use the Create Amortization button within the FinancialManagement || Assets || Assets window. Once the process completes, navigate to the[Asset Amortization] tab to see the suggestion of amortization postings. For example, ifwe had selected amortization over time, specifically over 3 years, this would be theproposal:If you are not satisfied with the proposal, you can delete all rows suggested (click on thefirst row, press shift and select the last row, press the Delete key and confirm) and click theRecalculate Amortization back inside the [Assets] tab.Posting AmortizationImagine you have defined several assets, each with their own amortization rules.Amortization needs to be posted for each accounting period (year or month, depending onthe definition and requirements). To do so, navigate to the Financial Management ||Assets || Amortization window where all periods with at least one asset to be posted inare listed:Select the desired period by double clicking on it. The editing screen opens with thefollowing options:
  • 7. Fields to note: • Description - enter any notes related to posting amortization of selected period • Accounting Date - date used to determine which period this posting belongs to within the general ledger • Starting Date - determine which starting date the amortization is calculated for • Total Amortization - field that will be automatically calculated with the total amortization amount posted for a selected periodTo see and doublecheck all the assets whose amortization will be posted within the currentlyselected period, click on the [Lines] tab.And finally, to post the amortization to the general ledger: 1. Click the Process button to complete the amortization posting document 2. If background accounting is enabled, the document will automatically also be posted to the general ledger within minutes. However, you can always click the Post button and manually post it and then see the resulting GL entry:
  • 8. Disposing of an AssetAn asset is disposed of once its depreciation plan is over. There are several different casesto end the lifecycle of an asset.Disposing with no Residual ValueOnce the final amortization installment is processed and posted to the General Ledger,Openbravo automatically checks off the "Fully Depreciated" field:
  • 9. This field is read-only to the user so only the automatic process can change it upon the finalamortization installment.Disposing with Remaining Residual ValueIf an asset will be completely amortized but still hold a value, the Residual Asset Valuefield should be filled out with the remaining value. Upon calculating the plan of amortizationfor an asset, Openbravo will then automatically calculate and consider only the actualDepreciation Amt. :There are various reasons for remaining residual value being greater than zero: 1. Irreversible loss of asset value - once an amortization is defined and in progress, a manual correction can be done by using the [Asset Amortization] tab and changing the Amortization Amount field for the next pending installment (find the next record that has not been amortized yet). There, change the amount to reflect the loss of the asset value: If there are other installments pending (more pending records within the [Asset Amortization]) delete the remaining lines (lines after the one just edited previously) manually: Afterwards, go to the Financial Management || Assets || Amortization window
  • 10. and process and post the customized amortization record (first click the Process button and then the Post button). Once the last line has been processed and posted, the assets amortization plan is complete and the Fully Depreciated field is now checked off automatically by the application. What is left now is to account for the loss of value which is done by G/L Journal (see user manual for financial processes). 2. The sale of an asset - the process of selling an asset that is still being amortized is almost identical to the one just described above. It only differs within the last step where the revenue of the asset needs to be accounted for as opposed to the loss of value. To do this, a sales invoice needs to be entered for this asset (see Order to Cash user manual).AccountingWhen posting amortization it is of utmost importance that it is posted to the correct accountwithin CoA (Chart of Accounts) depending on the asset type.Defining Default Accounts for New Asset CategoriesWhen defining new asset categories, the accounting for it is automatically inherited from thedefault accounts set for assets within the Financial Management || Accounting || Setup|| Accounting Schema window, the [Defaults] tab:The following two accounts are defined here:
  • 11. • Depreciation - Account present in the Profit & Loss statement that contains the expense incurred due to loss of value of the asset. This loss of value originates from the amortization plan defined for an asset. • Accumulated Depreciation - Figura en el activo del balance, minorando la inversión. Es la minoración del valor del activo consecuencia de la depreciación del inmovilizado material o inmaterial realizada de acuerdo al Plan de Amortización.Once configured according to the regulations of the specific country, the general ledgerentry that is created as part of posting the amortization will look like:If you would like to change the accounts that are set by default for newly defined assetcategories, change them within this window.Defining Accounts for an AssetWhen a new asset is created, it will inherit its accounting from the asset category selectedfor it (which is a mandatory field). This is the best practice that should be followed. To seewhat accounts have been assigned for the accounting of a particular asset, see the[Accounting] tab within the Financial Management || Assets || Asset window:The user has the freedom to change them to whichever account required but shouldconsider twice before doing so. Generally, accounting should be defined on the level of assetcategories and not altered within each individual asset.When amortization of this asset is posted to the General Ledger, it is posted to the accountsdefined here.