purchase return of reclassify assets

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Verified
Rajat walia asked a question on 16 Dec 2017 4:23 AM

Hi Experts,

I am using nav 2016. I am facing the issue on the purchase return process of fixed assets.

We have created one fixed asset and after that we transferred 20 % of acquisition cost to another fixed assets, now I need to do the return for the same(2nd assests) and what will be the effect if I create purchase return order for 2nd asset on 1st asset .

Please suggest me how do I proceed. 

Thanks

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Suggested Answer
Alexander Ermakov responded on 16 Dec 2017 5:23 AM

It depends on what do you want to do. I do not think that you want to return the 2nd asset with the initial cost of that, leaving 2nd asset still with the value of 20% of the 1st asset. But then, what do you want to have in your books as a result of that return? Are you considering to restore the 20% back to the 1st asset? Another question - have you already activated and depreciated both assets within some time?

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Suggested Answer
Robertas Rackauskas responded on 16 Dec 2017 5:44 AM

Hi Rajat,

in standard NAV W1 the purchase order return would simply credit the Acquisition Cost but will not dispose of the item (it might work differently with certain localizations). So, as Alexander said, you need to understand the required outcome in detail and work from there.

Robertas

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Rajat walia responded on 16 Dec 2017 8:04 AM

Hi,

I create purchase Invoice on 15.03.2017 with 64800 with 3 types of fixed asset in single FA Card. after this i post the depreciation with 19440 on same date. on same date i post FA reclassification journal and transfer the cost (11400) and depreciation(4230) from one FA to New FA Card.

Now i want to return new FA (11400) at current date. Then by which process i would need to go.

If i reverse the depreciation entry then it will reverse with old date.

Thanks

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Suggested Answer
Robertas Rackauskas responded on 16 Dec 2017 10:47 AM

In this case I would probably post the disposal of the FA, and do the GL Credit Memo rather than try to return the Fixed Asset.

Robertas

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Rajat walia responded on 16 Dec 2017 11:04 AM

Hi Robertas,

Can you explain in detail. if u explain in detail about GL Credit memo then it will be easy for me .

and what about depreciation ? I want to return the asset with acquisition cost. with the disposal it will show the book value in gain/loss account.

Thanks

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Verified Answer
Robertas Rackauskas responded on 17 Dec 2017 3:16 AM

Hi Rajat,

when you post the Disposal of FA via FA GL Journal, system will reverse the Acquisition cost and reverse the Depreciation. The difference would be posted to your Disposal GL Account.

Then you create the purchase credit memo, with the GL Account line (not Fixed Asset, as it's disposed now), pointing to any preferred GL Account. You can credit for any amount you like. Then you can do a journal to balance Disposal GL Account and the GL Account from the credit memo so you're left with the difference.

Hope that helps.

Robertas

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Rajat walia responded on 17 Dec 2017 4:55 AM

Hi,

thanks.

But now i have one doubt. for which GL account need to create purchase credit memo ?

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Suggested Answer
Robertas Rackauskas responded on 17 Dec 2017 6:07 AM

The GL Account on the Credit Memo is your choice. You want it to be on Income Statement, but other than that - depends on your specific COA

Robertas

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Rajat walia responded on 17 Dec 2017 6:09 AM

Thanks.

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Rajat walia responded on 17 Dec 2017 6:27 AM

Hi,

The last one doubt.

example.

Acquisition cost was  = 11400

dep = 4230

gain/loss account = 7170 because of disposal entry

Now i transfer the credit memo amount(11400) into gain loss account.

Now 4230 is my gain? would need to do any adjustment related to dep cost or not ?

Thanku so much for your guidance .

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Suggested Answer
Robertas Rackauskas responded on 17 Dec 2017 6:50 AM

As you said, the depreciation cost (4230) would balance with the 'gain' of 4230.  Probably worth adjusting both accounts against each other.

Robertas

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Rajat walia responded on 17 Dec 2017 7:05 AM

If i dont want to see the dep cost as gain and also want to return asset with 11400 then what would need to do ?

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Verified Answer
paras mehan responded on 18 Dec 2017 5:49 AM

Hi,

I Think its not perfect to hide the gain. Other wise at the time of auditing you will face the problem. I think you should need to go through as suggested Robertas.

Regards 

Paras Mehan

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Rajat walia responded on 18 Dec 2017 5:51 AM

Thanks.

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Rajat walia responded on 18 Dec 2017 6:04 AM

Hi Alexander,

At first i purchased asset after that i posted depreciation. after that i transfer the acquisition cost and depreciation from one asset to another.

this all things done in previous year. now i want to return the asset with current date.

i want to create credit memo with acquisition cost and i don't want to see the depreciation in gain loss account and if i reverse the entry then entry also want to reverse with current date as per client requirement.

Thanks.

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Verified Answer
Robertas Rackauskas responded on 17 Dec 2017 3:16 AM

Hi Rajat,

when you post the Disposal of FA via FA GL Journal, system will reverse the Acquisition cost and reverse the Depreciation. The difference would be posted to your Disposal GL Account.

Then you create the purchase credit memo, with the GL Account line (not Fixed Asset, as it's disposed now), pointing to any preferred GL Account. You can credit for any amount you like. Then you can do a journal to balance Disposal GL Account and the GL Account from the credit memo so you're left with the difference.

Hope that helps.

Robertas

Reply
Verified Answer
paras mehan responded on 18 Dec 2017 5:49 AM

Hi,

I Think its not perfect to hide the gain. Other wise at the time of auditing you will face the problem. I think you should need to go through as suggested Robertas.

Regards 

Paras Mehan

Reply
Suggested Answer
Alexander Ermakov responded on 16 Dec 2017 5:23 AM

It depends on what do you want to do. I do not think that you want to return the 2nd asset with the initial cost of that, leaving 2nd asset still with the value of 20% of the 1st asset. But then, what do you want to have in your books as a result of that return? Are you considering to restore the 20% back to the 1st asset? Another question - have you already activated and depreciated both assets within some time?

Reply
Suggested Answer
Robertas Rackauskas responded on 16 Dec 2017 5:44 AM

Hi Rajat,

in standard NAV W1 the purchase order return would simply credit the Acquisition Cost but will not dispose of the item (it might work differently with certain localizations). So, as Alexander said, you need to understand the required outcome in detail and work from there.

Robertas

Reply
Suggested Answer
Robertas Rackauskas responded on 16 Dec 2017 10:47 AM

In this case I would probably post the disposal of the FA, and do the GL Credit Memo rather than try to return the Fixed Asset.

Robertas

Reply
Suggested Answer
Robertas Rackauskas responded on 17 Dec 2017 6:07 AM

The GL Account on the Credit Memo is your choice. You want it to be on Income Statement, but other than that - depends on your specific COA

Robertas

Reply
Suggested Answer
Robertas Rackauskas responded on 17 Dec 2017 6:50 AM

As you said, the depreciation cost (4230) would balance with the 'gain' of 4230.  Probably worth adjusting both accounts against each other.

Robertas

Reply