Fixed Assets, cost basis, and FA clearing account

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Posted on by Rszeto

765

Hi,

From my understanding, a purchase for a fixed asset would be a debit to FA clearing acct and credit to AP. When you the receive the shipment, you create an asset and have the option to attach it to the receipt. Moving onto the book, that is when your FA clearing acct is credited and your asset account is debited. I hope I am right so far.

This is my scenario: when I received my 2 items, I created 2 assets. In total, they were worth 20,000 , but I for asset A I gave the item an acquisition cost of 15,000 and a cost basis of 20,000. On asset B I gave the item an acquisition cost of 5,000 and a cost basis of 5,000. When I utilized GL posting, my FA cleaning account was not washed out. Furthermore, when I tried this on test, I change the cost basis for asset A from 20,000 to 15,000 and GP created distributions that debited my FA clearing account by 5,000 and credited my asset account by 5,000. Does anyone know why my FA clearing account did not clear out the first time? And perhaps what is the best way to fix this issue? I ultimately want my asset's cost basis to be 15,000 and I want the FA clearing account to be clear.

Thank you in advance!

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Mahmoud Saadi 32,738 on at

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"This is my scenario: when I received my 2 items, I created 2 assets. In total, they were worth 20,000 , but I for asset A I gave the item an acquisition cost of 15,000 and a cost basis of 20,000"

The process is pretty much simple, you enter an AP transaction as follows;

Dr Cr

FA Clearing 15000 0

AP 0 15000

On the fixed asset, once you click on the purchase account and select this specific invoice, both (acquisition cost) and (cost basis) fields will be updated with the same amount (15000). Why are you changing the cost basis to 20,000 at this point ! Supposing you want to exclude a specific amount out of the 15000 not to be depreciated, then that's what the salvage value is for.

Now you will have the following journal entry created when you go to Fixed Asset- GL Posting:

Dr Cr

Asset Cost 15000 0

FA Clearing 0 15000

You may refer tot he reference below for a detailed explanation on the process of adding FA from payable management; Adding Fixed Asset from Payable Management

Your feedback is highly appreciated,

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Rszeto 765 on at

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Hi Mahmoud,

I unintentionally changed the cost basis to 20,000. I looked at the receipt and got confused with the overall cost of the two items.

So when I put 20,000 as my cost basis, did GP credit FA clearing account and debit Asset account? Because when I look at my FA clearing account, the 20,000 is still sitting there even after running GL posting. What can I do to change the cost basis from 20,000 back to 15,000 while clearing the FA clearing account?

When I tried changing the cost basis on test, GP gave me a debit to FA clearing and credit to Asset. This does make sense since we are lowering the asset amount, but the FA clearing should not be debited. Can you please advise me?

Thank you.

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Frank Hamelly | MVP... 46,625 Super User 2025 Season 2 on at

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Changing the Cost Basis should have no effect on the FA Clearing account whatsoever, if you're referring to the Cost Basis field in the Asset Book window. Changing the Cost Basis has no affect on the Acquisition Cost. Acquisition Cost would be the only value that affects FA Clearing and you have to change that in the Asset General window or the Asset Purchases window, which is accessed via the blue arrow next to the Acquisition Cost field.

Are you sure your Test and Production companies are configured identically for FA Purchases? I would start by looking at that setup in both companies and ensure the setup complies with the Setup instructions in Help.

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Rszeto 765 on at

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Here is an example:

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Rszeto 765 on at

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In this example. the Asset was originally 30,500. When I changed it to 28,000 GP created these distributions.

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Frank Hamelly | MVP... 46,625 Super User 2025 Season 2 on at

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Well, color me wrong on this one RS. I have never seen that before but after testing in GP2013 and GP2010, the behavior is as you describe. I'm trying to envision a scenario where the Cost Basis (the basis for Depreciation calculations) should make an adjustment to Acquisition Cost (what you paid for the asset) and affect the GL distributions. I did notice that even though GL distributions are created when changing the Cost Basis, it did not make a corresponding change in the Asset Acquisition Cost in the General card, which to me is a potential for throwing the GL out of balance with the Asset subledger. I'm puzzled by this one. Hopefully someone else can clear this up for us.

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Rszeto 765 on at

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Hi,

I think I may have figured out why:

Purchase

FA Clearing 30500

AP 30500

Asset A

Lab E 30500

FA Clearing 30500

Asset B

Lab E 2500

FA Clearing 2500

GL Posting

Lab E 33000

FA Clearing 33000

At this point FA clearing account is under by 2500 and Lab E is over by 2500.

So when you change the cost basis of Asset A from 30500 to 28000, GP does the following:

Change cost Basis:

FA Clearing 2500

Lab E 2500

This will balance FA clearing and Lab E.

FA Clearing

30500

333000

2500

0 0

Lab E

30500

2500

2500

30500

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Frank Hamelly | MVP... 46,625 Super User 2025 Season 2 on at

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Could be in your scenario, but I tested changing the Cost Basis in my system on an existing asset and it created the same distributions as in your example even though the original FA Clearing amount was correct.

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Somaya Hasan 20 on at

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Hi Mahmoud,

I have a case with one of our customers where they require reducing assets cost after it got depreciated for several year, we have tried amending cost basis field with the cost & hit on recalculate option to be as of changing date & then tried to dun depreciation for the end of period, however current depreciation amount is almost double than the normal rate. Did we miss something to get this result?

Thanks in advance!

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