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Dynamics 365 Community / Forums / Microsoft Dynamics NAV (Archived) / VAT amount to be inclu...
Microsoft Dynamics NAV (Archived)

VAT amount to be included in FA Value

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Posted on by Krish-NAV 122

Hello Everyone,

In my ongoing NAV 2018 project for a client from UAE there is a request for a feature in FA module. The government allows VAT to be included in the Fixed Asset value if the acquisition cost exceeds 6 million AED so that the company paying VAT is allowed to show the VAT as expense over the period of FA life. 

I read we can post a Purchase Invoice to add to the acquisition value but here there is no vendor involved hence no question of using PI. If I have to use the Fixed Asset G/L Journal I can debit the FA with the VAT value but which account to credit is a problem.

Any workarounds or suggestions welcome.

Thanks & Regards,

Krish

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  • Suggested answer
    azelaya59 Profile Picture
    azelaya59 2,807 on at

    One thing you can do is raise the value of the FA to include the VAT and depreciate as normal. Unless the VAT must depreciate at a different rate, then you must add the VAT on the FA card as a separate line and define a depreciation period that coincides with the new rate.

    Since this is not inventory, you cannot use "Charge Items".

  • Suggested answer
    azelaya59 Profile Picture
    azelaya59 2,807 on at

    Sorry I forgot to mention how to raise the FA value. You use the FA Journal only. This way it does not affect the GL.

  • Suggested answer
    azelaya59 Profile Picture
    azelaya59 2,807 on at

    One last thing...... If you create a new line on the FA card, I believe it's best to create a new "Depreciation Book" and have it point to the same GL account used for the VAT. Since you can depreciate the VAT, you should be able to reduce the tax liability at the same time.

  • Krish-NAV Profile Picture
    Krish-NAV 122 on at

    Thank you for the swift response Mr. Zelaya. I thought about the points you mentioned. However the situation is bit unique here. VAT is also applicable. On the original purchase of FA (valued above 6 million) VAT amount is calculated and goes to Purchase (Input) tax G/L Account which the customer can claim against VAT payable. Here, since the value of FA is above 6 million, the customer can show the VAT amount paid as expense in each year (until the life of the FA). For example, the VAT amount paid should be treated as some kind of deferral across years matching the FA life.

    I can use FA Journal. But asking customer to uncheck the G/L Acquisition Cost integration in Depreciation Book setup every time, not sure will be well received by customer. If I use FA G/L Journal to add value to the existing FA (sounds stupid because there is no G/L Account to credit at all) using some " Suspense Account" or "Opening Balance Account" on the credit side again system is throwing up error when I leave the Gen. Posting Type field on both debit and credit side.

    I think we will have to tell customer to approach us whenever they are going to acquire FA that is valued above 6 million. Commercially viable for us as consultant..:-). Atlast the FA Journal is the best option but customer wants the aggregated value to reflect in G/L.

    Thanks,

    Krish

  • Krish-NAV Profile Picture
    Krish-NAV 122 on at

    That's the catch. Customer wants the aggregate value of FA (Direct Cost+VAT) to reflect in G/L Fixed Asset Account so that Depreciation can be posted on the value. Purchase VAT G/L Account will show the actual VAT paid which can be claimed or used to calculate VAT payable.

    Krish.

  • Suggested answer
    azelaya59 Profile Picture
    azelaya59 2,807 on at

    I think you answered your own question..... if the FA value is Direct Cost + VAT, then raise the FA Value using the FA Journal and depreciate as normal. Then again, it's your customer and you what they want to hear........

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