Fixed Assets Manual - Managing your fixed assets
Managing your fixed assets
Once you have purchased a fixed asset, you may want to perform other actions in relation to the fixed asset. This is called managing your fixed assets. Due to technological changes, your fixed asset may have suddenly lost more of its value. You should then revalue its value in your general ledger. You can sell your fixed asset before it is fully depreciated, or decide to suspend the depreciation because the fixed asset is temporarily not in use.
These actions do not belong to the daily routine. Only a few people are, therefore, allowed to perform such actions. These management actions affect your general ledger accounts. In Exact Fixed Assets C/S, you have the following options to manage your fixed assets:
Revaluing assets
Over time, the value of your assets as recorded in your financial accounts may no longer reflect the actual value. The purchase price of the replacement of a machine may have decreased, or a building may have increased in value. You should then revalue (adjust the purchase value) your fixed assets. See Assets accounting system.
If you revalue your assets, your depreciation so far is recalculated according to the new depreciation basis. Then, a comparison is made to the old situation. Changing the value of your fixed assets will change the accumulated depreciation amount, unless you use a depreciation adjustment.
If an asset is depreciated in the posting book, the general ledger accounts will be affected. These accounts are defined in the asset group. See Creating asset groups.
Several of the following accounts may be involved:
- The balance sheet account for the asset (purchase amount)
- The corresponding revaluation account (either positive or negative)
- The depreciation account (Balance sheet account)
- Depreciation costs account (profit and loss account). (Either positive or negative.)
Revaluing creates two different entries. One to change the value of your fixed asset (the depreciation basic amount), and one (when is chosen for depreciation adjustment) to change the (cumulative) depreciation costs.
Fixed Assets can be revaluated in: [Management, Revalue assets].
Revision of life
During the useful life of an asset you might find that you have underestimated its life span or that the useful life should be be adapted as a result of a revision. You will need to decide whether you want to change the depreciation this asset. Use [Management, Revision of life] to change the depreciation of an existing asset. Using this function depends on local regulation.
Regrouping assets
Use this function to move assets from one asset set to another, provided that the data of the asset sets correspond. Use [Management, Regroup assets] to regroup fixed assets.
Once an asset is activated, you can only modify a limited amount of data. One of the few modifications involves regrouping. Regrouping allows you to:
- regroup your fixed assets by cost center, cost unit, location, department or user.
- regroup assets by asset set.
- You can only regroup by asset if there is not another asset with the same code in the asset set.
- Regroup by asset set does not imply that you can change the asset book and/or depreciation method.
- change the asset set code. You can also split bulk assets in two or more parts.
Suspending asset depreciation
Asset suspension allows you to discontinue depreciation from a certain date. Once you have canceled suspension, depreciation will continue. The useful life of the fixed asset you have suspended will increase by the period you have suspended the depreciation. Suspend asset depreciations in: [Management, Asset suspension].
An asset history line will be generated with the amount '0' for each period you do not depreciate. This enables you to see the suspension in your reports. Using this function depends on local regulations.
Recording asset maintenance data
Using the Fixed Asset module, you can enter a few maintenance data. Use: [Management, Maintenance data]. You can enter the date and maintenance costs of the latest check up as well as the next date planned for activities.
The display shows all maintenance activities so far, together with the date of the next planned maintenance. By selecting and clicking one of the previous maintenance dates, you can check the maintenance cost of that maintenance.
Be aware that no financial entries will be made in the posting book.
Selling fixed assets
When you buy new fixed assets, the old assets are often sold or traded in. Selling a fixed asset implies that it should no longer appear on your balance sheet. Consequently, you have to credit your asset account and debit the cumulative depreciation account. Selling an asset influences the profit and loss statement, unless the amount for which the asset is sold is the same as its book value. If you are selling a fixed asset, the asset is wholly depreciated in all asset books until the date of sale according to the depreciation calendar and method linked to the asset book. At the same time, entries are created in the general ledger according to the depreciation method which is linked to the posting book which is used for the fixed asset.
Sell fixed assets in: [Management, Disposal of assets].
Depending on the book value of the fixed asset and its sales price, the following situations may occur. In the following examples the entries are made in the general journal:
Example
A car is sold. The car is recorded in the following accounts for the following amounts:
Asset (group) account cars: 50,000 Debit
Cumulative depreciation cars: 45,000 Credit
Book value: 5,000 (Debit)
Situation 1:
The car is sold for 3,000. This results in the following journal entry:
Debtors (or bank or suspense account)3,000
Cumulative depreciation cars45,000
Profit account2,000
// Asset (group) accounts cars50,000
Situation 2:
The car is sold for 10,000
Debtors (or bank or a suspense account)11,000
Cumulative depreciation cars45,000
Profit account5,000
// Asset (group) accounts cars50,000
Compressing fixed assets
You may find that your fixed assets accounting system is taking up too much space on your database server. If so, you may decide to compress the data on assets that have been sold. See also Deleting sold assets.
- A compression cannot be undone. Make sure that you compress the right data or you will lose valuable information.
Compress fixed assets in: [Management, Compress assets].
Deleting sold assets
If you sell an asset, the value of the asset will be removed from your financial accounting system. The transaction data, however, will still be available. You may want to delete all data on an asset, thus reducing the size of your fixed asset accounting system. Delete sold assets in: [Management, Delete assets sold].
- If you just want to reduce the size of your fixed assets accounting system, compress your transactions. Not all data will be deleted; but only compressed. See Compressing fixed assets.
- Deleted asset data will be irretrievable.
Finance Manual C/S > Contents > Working with fixed assets > Managing your fixed assets
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| Main Category: |
Support Product Know How |
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Online help main |
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On-line help files |
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Details |
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06.840.561 |
| Assortment: |
Exact Financials (v3)
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Date: |
23-11-2007 |
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