Fixed Assets.  That is an interesting topic and one that has a multitude of options in D365.  From Acquisition to Depreciation to Disposal, D365 offers several ways to accomplish assets management.  And within each transaction, there is a myriad of options to insure the transactions are recorded with the most detail and precision.

Today’s topic is acquisition of fixed assets which requires the creation of a fixed asset record, followed by the procurement and payment for the asset, or the ability to create the fixed asset directly from the procurement of that asset.  A Fixed asset must be in Open status before depreciation can be posted and the Open status means the asset has been acquired.

Fixed asset creation and acquisition can be simplified because integration between the Fixed Assets, Procurement and Accounts Payable can be configured.  So let’s review some D365 configuration.

Configuration

Parameters

Fixed Asset parameters must be maintained to take full advantage of D365 functionality.  Once the configuration is set up, the same method will be used for all fixed assets.

Of specific concern regarding Acquisition of Fixed assets, the following parameters must be reviewed:

  1. Allow multiple acquisitions – Indicate whether or not an asset can have multiple acquisition journals associated with it.  If a new asset ID must be generated for each acquisition transaction, then the indicator must be unchecked.
  2. Allow asset acquisition from Purchasing – Set to Yes if acquisition is allowed to be initiated from a Purchase order.
  3. Restrict asset acquisition posting to user group – Create and select a User group if only certain users in the group can post fixed asset acquisitions.
  4. Create asset during product receipt or invoice posting – If the asset should be created at receipt or invoice, set to Yes.
  5. Check for Fixed asset creation during line entry – Check if the item qualifies as a Fixed asset, against fixed asset rules, as the Purchase order line is being created, if set to Yes

Depreciation Profiles

Not all assets are depreciated using the same method.

Navigate to Fixed Assets > Setup > Depreciation profiles to setup the different depreciation profile that will be necessary for the various fixed assets to be created.  The Depreciation profile determines the frequency of depreciation.

D365 supports several standard depreciation methods from which to choose:

depreciation profile

Fixed Asset Books

Each asset can have more than one Book value assigned to it and maintained.  The Books to be selected from must be set up by navigating to Fixed Assets > Setup > Books.

Each Book has a name and contains whether or not depreciation is calculated, and whether or not the values calculated for this book are posted to General ledger as well as other settings such as the Depreciation profile.

fixed asset books

Fixed Asset Groups

Fixed assets can be grouped or categorized into Fixed asset groups.  The Asset group a Fixed asset is assigned to can be used to determine details about the asset to insure consistency among the assets in that group.

The grouping of assets may look something like this:

  • Buildings
  • Automobiles
  • Land
  • Furniture/Fixtures
  • Office Equipment

The Fixed Asset group determines the Type of assets in the group, an asset number sequence for the group (if auto numbered), the capitalization threshold for the group, bar code settings, etc.

fixed asset groups

The Fixed asset group also determines the Books to be maintained for the assets in the group.  When assigning a book to a group, addition details are determined for the book and group combination including Service life and Depreciation convention.  The convention defines the depreciation cycle for the book and group combination.

The Fixed asset groups are also put to use in defined the Fixed asset posting profiles.  This means the accounting for assets within a group, by transaction, will be the same.

The combination of the Fixed asset group and Book is sometimes referred to as a Value Model.

Fixed asset acquisition

After configuration is complete, Fixed asset acquisition can begin.

Option 1 – Create and acquire through journal

A Fixed asset can be CREATED by navigating to Fixed assets > Fixed assets > Fixed assets.  Keep in mind, CREATING an asset is not ACQUIRING as asset.  This option can be used regardless of the Fixed asset integration with Accounts payable.

Creating an asset is simply setting that asset up in the system.  Acquisition is recorded with a Fixed asset journal.

Click New.

Select a Group the new asset will be a member of, and if that group is defined to have a number auto-generated, the Number field will populate.  Otherwise, it will need to be filled in.

Enter a Name.

Enter any other General information, Location, References, Insurance and Technical details to the extent the system is being utilized for tracking, reporting and valuing.

Select Books.  The Books configured for the asset group will automatically be listed for the new asset.  The status of the Asset will be listed as Not yet Acquired.  The asset’s valuations are all $0.00.

books

To ACQUIRE the asset, navigate to Fixed assets > Journal entries > Fixed assets journal.

Select New.

Select the Journal Name.

Select Lines.

fixed asset journal

The Transaction type must be Acquisition.

Select the new Fixed Asset recently created using the Account field.  The Account name and Book will automatically populate from the Fixed Asset record.

Enter the Debit acquisition value.

Update the Offset account type and Account.  Typically this method of Acquisition is performed when the Fixed asset is created after the Purchase, and the purchase was originally expensed, so the offset will be to credit the originally expensed item.

Option 2 – Acquisition through Purchase

Acquisition through Purchasing depends on the configuration parameters selected, specifically for #2 and #4 listed above.

A.      Using the first option, manually create the Fixed asset and enter the Fixed asset ID on the Purchase order line or Vendor invoice.

When the invoice is posted, the asset is acquired so the status changes to Open, and the Acquisition date and Price is populated.  An Acquisition transaction is reviewable in the list of asset transactions.

In this configuration, #2 is No and #4 is Yes.

B.      Using another option, or configuration combination, manually create the Fixed asset, enter the Fixed asset ID on the Purchase order line or Vendor invoice, but no acquisition is recorded for the asset at invoice posting.

In this configuration, #2 is No and #4 is No.

C.      Using a third option, the Fixed asset can be created automatically when you post the product receipt or Vendor invoice with the Create new Fixed asset activated.  In this case, the acquisition is recorded in the same way as the default method, at the time of Vendor invoice posting.

In this configuration, #2 is Yes and #4 is Yes.

D.      Using the fourth option, the Fixed asset is created automatically as in the third option, but no acquisition transaction is recorded at Vendor invoice posting.

In this configuration, #2 is Yes and #4 is No.

Choosing to use the third or fourth option provides more flexibility by allowing more acquisition methods to be employed depending on the Purchase order details.

Options B and C require a fixed asset journal an Acquisition proposal to be posted before the Fixed asset status changes to open, and an Acquisition value and date are populated for the Fixed asset.

Fixed asset acquisition – additional processes

In addition to Fixed asset creation and acquisition in conjunction with Procurement and Accounts Payable, Fixed assets can be acquired in other ways.  Remember, Acquisition is not the same as Creation.

Advanced acquisition processes include:

  • Asset assembly – The asset is created manually and the acquisition is recorded through a General ledger or Fixed asset (acquisition) journal.  The inventory items that were used to create the new asset are removed from inventory when they are offset to the newly created asset.
  • Project Module – An asset is created as the result of an Internal project.
  • Fixed Asset Acquisition proposal – Similar to a depreciation proposal, the system will review Not yet Acquired assets that have an expected price assigned to them, and propose an acquisition journal.  The proposal is reviewed and posted, as required.

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