21. Sell a fixed asset using a Free Text Invoice
Create a new fixed asset selecting the customer that is purchasing the
asset
Select the fixed asset in the line details tab
Add a description and sales price to the line
Post the free text invoice
The asset is removed from the
books and a profit or loss is
recorded along with an AR
entry for the selling price.
22. Dispose of a fixed asset as scrap
Create a fixed asset journal and select transaction type Disposal – scrap
in the lines
Select the fixed asset in the line or create a Disposal – scrap proposal if
multiple fixed assets are to be scrapped
Optionally enter a reason code
Post the journal
• This journal is different – there
is no dollar amount in the line.
• An additional may be added as
a depreciation adjustment if
the depreciation was not up to
date.
27. Eliminate a fixed asset from a project estimate
To eliminate a fixed asset from a project, there are 3 modules involved:
Fixed assets Projects AP
Eliminating the asset removes it from WIP where it was carried within the project and transfers the
cost to the fixed asset.
28. Eliminate a fixed asset from a project estimate
The project must be an investment project
The asset needs to be purchased and invoiced and linked to the project
The asset must be created but not acquired
An estimate for the project is created/posted that includes the vendor invoice
transaction
When percent complete is 100%, the asset can be eliminated
Fixed asset groups let you group your assets and specify default attributes for every asset that is assigned to a group. Books are assigned to fixed asset groups. Books track the financial value of a fixed asset over time by using the depreciation configuration that is defined in the depreciation profile.
Fixed assets are assigned to a group when they are created. By default, the books that are assigned to the fixed asset group are then assigned to the fixed asset. Books that are configured to post to the general ledger are associated with a posting profile. Ledger accounts are defined for each book in the posting profile and are used when fixed asset transactions are posted.
The Fixed asset group field is the only required field when you create a fixed asset. The value of this field determines the default value of several informational fields for the asset. Books are set up so that a default book is assigned to each asset in a group. In this way, attributes that you set for the books can be specific to a group of assets. These attributes include the service life and the depreciation convention.
You can also define special depreciation allowances, or bonus depreciation, for a specific combination of a fixed asset group and a book. You must assign a priority to the special depreciation allowance to specify the order that allowances are calculated in when multiple allowances are assigned to a book.
The last step is to update the fixed asset parameters. The Capitalization threshold field determines the assets that are depreciated. If a purchase line is selected as a fixed asset, but it doesn't meet the specified capitalization threshold, a fixed asset is still created or updated, but the Calculate depreciation option is set to No. Therefore, the asset won't be automatically depreciated as part of the depreciation proposals.
One important option is named Automatically create depreciation adjustment amounts with disposal. When you set this option to Yes, the asset depreciation is automatically adjusted, based on the depreciation settings at the time of asset disposal. Another option lets you deduct cash discounts from the acquisition amount when you acquire fixed assets by using a vendor invoice.
On the Purchase orders FastTab, you can configure how assets are created as part of the purchasing process. The first option is named Allow asset acquisition from Purchasing. If you set this option to Yes, asset acquisition occurs when the invoice is posted. If you set this option to No, you can still put a fixed asset on a purchase order (PO) and invoice, but the acquisition won't be posted.
Posting must be done as a separate step, from the Fixed assets journal. The Create asset during product receipt or invoice posting option lets you create a new asset "on the fly" during posting. Therefore, the asset doesn't have to be set up as a fixed asset before the transaction. The last option, Check for fixed assets creation during line entry, applies only to purchase requisitions.
Most companies use one or more of the straight-line methods, one or more of the reducing balance methods, or the manual method for depreciation calculations. Regardless of the method that is used, the rationale for all methods is to allocate or accrue the depreciable value of the asset into accounting periods.
The Fixed asset management workspace shows information that is related to fixed assets that are entered in the system. This workspace includes a summary view and an analytics view. The My work tab shows summary tiles, fixed asset details, and related information about fixed assets in the current company. You can also add analytics to the Power BI analytics section directly in the workspace. The Analytics – all companies tab uses capabilities of Microsoft Power BI to show visuals that are related to fixed assets in all companies.
The tiles in the Summary section give an overview of your fixed assets. The information includes metrics about assets that aren't yet acquired, assets that have been acquired during the current year, and assets that have been disposed of during the current year. The Summary section also has quick navigation to the Fixed asset list page, batch depreciation proposal, and fixed asset journal.
The Find fixed assets section lets you quickly search for assets by providing the fixed asset number, group, name, location, or person who is responsible. All assets that match the search criteria will appear in the list.
From the list, you can view the following pages:
Details page for the fixed asset
Books page for all books that are associated with the fixed asset
Fixed asset valuations page
The Fixed asset valuations page lets you see, on one page, the most important information about a fixed asset, and also details for all books that are associated with the fixed asset. The Balances option at the upper left of the page shows the current valuation for each book that is associated with the fixed asset. You can drill back from the values to see the detailed transactions that make up the summary value.
The Profile option at the upper left of the page shows the depreciation schedule for each book that is associated with the fixed asset. Here, you can view the amounts based on either accounting or reporting currencies.
The Fixed assets>Fixed assets>Fixed assets form provides a location where a company can record information about and manage fixed assets. The Fixed asset table holds both financial and non-financial information about assets. Non-financial information relates to the physical asset. Most non-financial information is recorded when the asset is set up. Examples of non-financial information include the following:
Asset name
Serial number
Technical information such as maintenance dates
Insurance information
Bar code
Location
The Structure FastTab indicates the relationship between the asset and other assets, either as a main asset with underlying components or as a component assigned to another asset.
Value adjustments consist of the following Transaction types, Write up adjustment, Write down adjustment, and Revaluation.
Typically, a service life of zero (0) is entered for continuing property assets and continuing property assets are excluded from the valuation report that you reconcile with the general ledger.
Assets with a status of Suspended, Closed, Sold or Scrapped cannot be updated with additional transactions. However, the status can be updated manually to allow for posting.
The update of the asset status is always done for each Book. This is necessary because an asset might be fully depreciated for tax purposes, but still open for additional depreciation posting for accounting purposes.
This lesson shows the process for selling a fixed asset on a free text invoice. The process is pretty simple but there can be a few gotchas that occur.
First of all, the dimensions selected on the Free Text Invoice are those of the customer. The system does not take the default dimensions from the free text invoice.
Next is dealing with all of the different asset books. The lesson focuses only on a single asset book –the one that posts to our general ledger “Current” posting layer which is the normal posting layer. The postings to the tax layer are not discussed.
The fixed asset posting profile is never discussed in this lesson and the postings for the sale of a fixed asset are complex. This lesson walks through each of the postings in the voucher and how they are determined. Use the lesson for these details because there is always someone that asks! Others just want to know how to do the sale and that is very simple.
It is best to create a new asset. The demo ones have not been depreciated in 5 years and do funny things when they post that you don’t want to have to explain. Create a new asset, set the default dimensions on the SLSL and T_150_SLLR asset books. Acquire the asset. Depreciate it through previous period. Then you are ready for this.
This lesson shows the process for disposing of a fixed asset as scrap. The asset to be scrapped is very similar to the asset used for sale so that similarities can be drawn. In this case the vehicle got in an accident and was totaled. Hence it will be scrapped, not sold.
Use a fixed asset journal. The transaction type will be disposal scrap.
It is best to create a new asset. The demo ones have not been depreciated in 5 years and do funny things when they post that you don’t want to have to explain. Create a new asset, set the default dimensions on the SLSL and T_150_SLLR asset books. Acquire the asset. Depreciate it through previous period. Then you are ready for this.
You can either fill in the asset for just one or use the proposal and select Disposal – scrap and enter criteria. The proposal fails (message Book does not exist for fixed asset)
if you filter and have a fixed asset filled in that is already scrapped or sold so if you get that error trying to do the proposal, fill in the asset on the line and the proposal screen will display.
Next is dealing with all of the different asset books. The lesson focuses only on a single asset book –the one that posts to our general ledger “Current” posting layer which is the normal posting layer. The postings to the tax layer are not discussed.
The fixed asset posting profile is never discussed in this lesson and the postings for the scrap of a fixed asset are complex and similar to those for sale. This lesson walks through each of the postings in the voucher and how they are determined. Use the lesson for these details because there is always someone that asks! Others just want to know how to do the sale and that is very simple.
There is a “gotcha” here. The GL Parameter to allow multiple non-ledger accounts in a single voucher has to be set for fixed asset disposal journals to work. This is on the general tab of the General Ledger parameters and is labeled “Allow multiple transactions within one voucher”. This setting is not recommended by Microsoft but it appears they did not change the way this journal is created when they added the switch and recommended it be off. The default setting in our demo data is off so change it!
General ledger
Any fixed asset transaction type can be posted in the General journal page. You can also use journals in Fixed assets to post fixed asset transactions.
On the Fixed asset posting profiles page, you define the main accounts that fixed asset book transactions are posted to. You also specify the types of fixed asset transactions that are posted to each main account. You can create various combinations of main accounts for fixed assets, depending on the level of detail that you want for fixed assets in the general ledger. Main accounts can be based on transaction types, books, and other main accounts.
Inventory management
In the inventory journal for fixed assets, you can enter the acquisition of fixed assets that the legal entity has produced or constructed for itself. You can then transfer inventory items to fixed assets either as an acquisition or as part of an acquisition.
Posting rules that are set up on the Posting page in Inventory management control the decrease in inventory when an acquisition is posted. However, you don’t always decrease inventory when you post invoices that are related to fixed assets. In some cases, the fixed assets might be purchased for internal use. An example is a laptop that is purchased for the sales department. When you work with purchase orders, you can use items that are set up for both resale and internal use.
Accounts receivable
The integration of Fixed assets with Accounts receivable uses posting profiles that are set up in Fixed assets. These posting profiles are activated when a fixed asset, book, and fixed asset transaction type are selected for a customer invoice before the customer invoice is posted. Because fixed assets aren’t part of Inventory management, you must use the Free text invoice page when you sell a fixed asset.
Accounts payable
Fixed assets that are for internal use are set up so that they have an account type of Fixed asset receipt. This account type is used to track the receipt of the fixed asset. When you post a vendor invoice, use the fixed asset receipt account if any of the following conditions is true:
The invoice line contains an existing fixed asset for internal purposes.
The New fixed asset? check box is selected for the product receipt line that is posted.
The Create a new fixed asset check box is selected for the vendor invoice line.
You can enter Fixed assets transactions in the Purchase order page. Enter the required information to create a purchase order, and then click OK. In the Purchase order page, click the Line details FastTab. Then, on the Fixed assets tab, enter information about the fixed asset.
To post an acquisition transaction for an existing fixed asset, specify the fixed asset number, book, and transaction type. The fixed asset cannot be posted if any of this information is missing. To post an acquisition transaction for a new fixed asset, select the New fixed asset? option, and then select the fixed asset group to assign the new asset to.
Fixed assets that are for internal use are set up so that they have an account type of Fixed asset receipt. This account type is used to track the receipt of the fixed asset. When you post a vendor invoice, use the fixed asset receipt account if any of the following conditions is true:
The invoice line contains an existing fixed asset for internal purposes.
The New fixed asset? check box is selected for the product receipt line that is posted.
The Create a new fixed asset check box is selected for the vendor invoice line.
Typically, this account is an expense account. You can set up the Fixed asset receipt account type for either an item group or an individual item by using the Purchase order tab on the Item group or Posting page.
In order to transfer depreciation expenses to the ledger budget in the budgeting module in Dynamics 365 Finance first, you need to create a new journal name prior to using the fixed asset budget transfer functionality.
You can create this journal name in General ledger> Journal setup> Journal names with the Fixed asset budget as the journal type.
You need to have your basic budgeting already setup. Refer to module 7 of this course to learn how you can configure and manage budgets.
Then you will use the fixed asset budget journal by navigating to Fixed assets> Budget> Fixed asset budget journal and create a new journal and go to the lines.
At the top of the form, click the Proposals button and then click Depreciation proposal. You will be creating budget entries for depreciation expenses and the accumulated depreciation. Choose your budget model and date interval. To have less lines in the journal you can select Summarize depreciation option. This will summarize the depreciation of the entire year for each asset as opposed to having a line of depreciation per period per asset.
Once the entries have generated, click Post at the top of the form and choose the Transfer to fixed asset and ledger budget option so the budget is on the fixed record and in the budget registry form.
After that is complete, you can go to Budgeting> Budget register entries to see the budget register entry of your fixed asset depreciation. Click the Update budget balances button at the top of the form to post the budget.
The concept of elimination is really just removing the WIP value associated with the Asset from the project and transferring it to the asset itself. The asset is created initially as a “holding” place – we know it will be acquired in the future. The purchase (AP vendor invoice) is linked to the project so that this becomes a cost associated with the project.
These are the steps involved in doing the elimination. The elimination itself is simple but there are many setup steps in Projects, Fixed Assets, and AP before you can actually eliminate the fixed asset. The example used in this lesson is very simple. This gets much more complex if the asset is under construction and the goal is transfer costs periodically to the asset as construction continues.
Activity type Lab
Activity title Acquire a fixed asset by using an AP invoice journal
Justification Students will learn how to acquire a fixed asset by using an AP invoice journal
Overview/Scenario of activity In this activity you will
Create a purchase order for a fixed asset
Create a packing slip to confirm the receive of the Fixed Asset
Acquire the fixed asset by posting the invoice journal
Estimated time to complete this activity 15 - 20 minutes
Please download the video “Use of two depreciation methods for Fixed Assets” from the Learning Download Center, in a zip file called Activities and play it for the students.
Activity type Video
Activity title Use of two depreciation methods for Fixed Assets
Justification Students will learn how to setup a depreciation profile, how to create a fixed asset, how to post an invoice journal related to the fixed asset and how to depreciate with two methods.
Overview/Scenario of activity In this activity you will learn how to setup a depreciation profile, how to create a fixed asset, how to post an invoice journal related to the fixed asset and how to depreciate with two methods.
Estimated time to complete this activity 10 mins
If you are validating charges for Accounts payable, and if the charges are calculated as a fixed amount instead of a percentage, this value must be less than the maximum amount that is specified in the Charges code form.
In the Charges currency code field, specify a currency for the charge to use a different currency than is specified in the Currency field. This is possible if the Debit or Credit type is either Ledger account or Item for the selected charges code.
It is time to check your knowledge by answering the questions and clarifying your answers.
