In most of the organization fixed asset capitalization is big challenge and in today’s scenario decision is taken by finance person which leads to the dependency and brings the process inefficiency for capitalizing the asset.

Now this can be resolved by suggesting and implementing that manual decision as policy or rule in system which will make process smoother and automate the capitalization process.

Now, lets understand this by one example:

Company A, which is having two legal entity USMF and USSI. Now they want to define the “Equipment Capitalization” rule in system. Here are the rules to be considered:

If Procurement category = Computers and Amount >= 5000 USD, it should be considered as fixed asset.

Asset group classification should be:

For USMF it should be mapped to “COMP” asset group

For USSI it should be mapped to “Office” group

So, lets see how this can be done in system.

Pre-Requisites:

  1. Fixed asset group should be defined and configured.
  2. Procurement category should be defined and configured.

Configuration:

Step-1: Define the organization wide fixed asset identifier.

This setup will determine that which fixed asset group in each legal entity will be mapped as equipment.

Procurement and Souring > Setup > Fixed asset

Step-2: Define Business rule for fixed asset determination-Organization wide.

Procurement and Souring > Setup > Fixed asset

Step-3(Optional): Define Business rule for fixed asset determination-Legal entity Specific.

Procurement and Souring > Setup > Fixed asset

Process:

Scenario -1:

Create Purchase requisition and add line.

Buying Legal entity = USMF, Procurement Category = Computer, Amount = 2000

Scenario 2:

Create Purchase requisition and add line.

Buying Legal entity = USMF, Procurement Category = Computer, Amount = 7000

Scenario 3:

Create Purchase requisition and add line.

Buying Legal entity = USSI, Procurement Category = Computer, Amount = 8000

That is, it for this blog, Hope this will help you to define the fixed asset determination policy for your customer.

Thank You!!! Keep reading and share with your Network.