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Fixed assets book - Allow negative net book value

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Posted on by Daxer Persson

3,005

Hi

Please explain when or not to set "allow negative net book value" as yes on FA-book.

Thanks

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Sten Baumgarten 10 on at

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RE: Fixed assets book - Allow negative net book value

Hi Daxer

Within the aircraft industry when reporting accounting to IFRS a negative fixed asset can arise when a used aircraft is purchased. The fixed asset value of the aircraft must be posted at marked value. The difference between the market value and the purchase price can be both a positive and a negative amount. When the marked value is higher than the purchase price, a fixed asset with a negative arise.

Example:

Purchase price 150 (credit cash)

Marked value 200 (debit fixed asset aircraft acquisition cost)

Difference between purchase price and market value 50 (credit fixed asset type "maintenance intangible")

The negative fixed asset in this case is either depreciated over the remaining service life of the aircraft if the company use the aircraft or over the the life of the lease contract if the aircraft is operated by another company.

When a negative fixed asset is acquired, you must set "allow negative net book value" on the fixed asset. When negative fixed asset is depreciated Dynamics 365 for Finance and Operations cannot calculate a depreciation proposal. The periodic depreciation therefor must be calculated and posted manually.

This issue has been reported to Microsoft, but it is not included as new functionality in the Road map.

Kind regards

Sten
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Ludwig Reinhard Microsoft Employee on at

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RE: Fixed assets book - Allow negative net book value

Hello Daxer Persson,

I have heard that people use this for capital contributions from landlords and non-refundable portion of deposits. Do not know much details except that the value can drop below zero in such cases and that people still need to run depreciations even though the value is negative. Never used it myself in a live project because I have not came across such a requirement in practice.

Best regards,

Ludwig

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