Fixed assets

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Posted on by Michael agostini

Dear Microsoft Finance Community

I have a question around D365 fixed asset functionality and assets under construction.

Our client is installing an asset such as a machine (i.e. purchase machine and incur all the costs associated with its installation and getting it to work) and booking all the costs to a Balance sheet construction in process account.

QUESTION

Can you do this in the D365 Fixed asset module. In other words set up an asset that is "under construction" that has an GL account = "Equipment under construction" and tack all the costs associated with this machine against this fixed asset record / asset. When the asset is ready to go into production then transfer all the costs to a real depreciable asset and start depreciating. This new asset would still have a record of all the invoices that were paid to crate it.

The other option would be to set up a custom financial dimension on the construction in process account and track the purchases that way.

Thanks,

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Michael agostini on at

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RE: Fixed assets

Zvika

I like option to but with the "reclass" feature instead.

This way all the information is transferred to the new actual depreciable asset.

Thoughts...

Thanks

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ZvikaR 152 on at

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RE: Fixed assets

This requirement of being able to track a fixed asset back to the originating invoices is a requirement I keep seeing.

To address it I can think of 2 alternatives:

option 1:

1. Use project module to record CIP (as Microsoft intended you to..) - this will link all purchases to a single project

2. Eliminate project to fixed asset - this will link "data wise" the fixed asset to a project

3. Create a customer report/inquiry that use the above "out of the box" links, to report on invoice lines per fixed asset.

option 2:

If the client is happy, per my previous message to keep CIP and FA balances on the same ledger account, you can record all invoices directly into the fixed asset, and use, as you suggested, the "transfer" functionality to mark when it goes into service.

This will give you the link you want, since the acquisition transactions to the asset will show you the FA - invoice link you are looking for.

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ZvikaR 152 on at

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RE: Fixed assets

The "transfer" functionality will allow you to change financial dimensions for the asset but not allow you to move from one ledger account to another.

so if your client is OK with keeping CIP and asset balances on the same ledger account, and just distinguishing the different kind of balances using a financial dimensions, you'll be good.

My personal experience was that clients were not happy to use the same account for these things

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Michael agostini on at

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RE: Fixed assets

Ludwig,

I believe the asset transfer feature is also an option is it not?

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Michael agostini on at

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RE: Fixed assets

Zvika Rimalt,

What you are saying above is what I want to do.

But the question is (and I eluded to it in my response to Ludwig) is how do I get the detail (invoice activity) that was populated in the CIP account over to the asset.

The client wants it there for their auditor to see.

Thanks,

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Michael agostini on at

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RE: Fixed assets

Ludwig,

Based on what you said above here is my question (or lack of understanding).

1) It looks like the client wants to book all the asset costs in a CIP account first and track them using a customer financial dimension. Say they are building out a store. That is no problem.

2) They would have multiple invoices against a CIP account / project. Note they are paying the vendors using an invoice journal and just Debiting the CIP account.

3) When the "store renovations" are complete" lets say they have 20 invoices and a total of 25,000.00 in costs all against this CIP account.

4) We need to do a journal entry to DR the new asset and CR the CIP asset.

Questions

1) It appears the client wants to some how record all the 20 invoices against the fixed asset so they can show the auditors all the details. Not sure how to do that in this scenario.

2) My understanding is I would now create a new asset and then do an asset acquisition journal entry. But in this scenario I do not have any of the invoice details populated on the asset.

We may need to get the client to move to a different process but that is what they do in their legacy system now.

Thanks,

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ZvikaR 152 on at

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RE: Fixed assets

I don't think financial dimension will help you in this case.

From accounting point of view there has to be a completely separate ledger account holding "CIP" balance and holding "fixed asset" balance.

I am not sure I understood Dr Ludwig's comment that moving from one asset to another is absolutely required in that context, since without moving from one asset to another you will not get the ledger account movement.

did you consider not using an FA at all at the CIP stage - so putting the balance directly into a CIP account for the duration of the project, and then when the asset goes into use, use a fixed asset journal to move the balance into the fixed asset module?

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Michael agostini on at

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RE: Fixed assets

Two questions Ludwig

1) I am assuming I need to set up an additional fixed asset group called CIP with the correct CIP main account in it.

2) Would it not be easier just to use a custom financial dimension on the CIP account. :)

Thanks very much,

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Michael agostini on at

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RE: Fixed assets

I am not sure what inventory has to do width any of this. I understand what a CIP account is.

Thanks

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Michael agostini on at

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RE: Fixed assets

That is what I wanted to know. Thank you.

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