Friday, 3 August 2012

AX 2012 Fixed Asset Set Up


1. Set Up Journal Names in General Ledger

To record fixed asset transactions using journals, you must create at least one journal name using the journal type Post fixed assets in the setup of the General ledger module. If budgets for fixed assets are required, you must also create a journal name that uses the journal type Fixed asset budget.

2. Journal Names in Inventory Management

Setting up journal names in the Inventory management module is necessary if fixed assets are assembled by using inventory items.

3. Main Accounts

Full integration of Fixed assets with the General ledger requires the following:

       Setup of accounts in the Chart of Accounts specifically for use with Fixed assets
       Assigning these accounts in the Fixed asset posting profiles for Fixed asset transaction types

Typically, accounts are set up so that the following can be captured.

       Acquisition values - both current and prior years
       Accumulated depreciation - both current and prior years
       Value adjustments
       Disposal of assets

4. Depreciation Profiles

       Depreciation profiles are used to define rules for calculating depreciation.
       Creating profiles is required for depreciable assets. This usually refers to tangible
       assets, but intangible assets can also use depreciation profiles.
       Financial assets such as shares of stocks or bonds are considered nondepreciable.
       Therefore, depreciation profiles are not required for these assets.
       The following methods are available for depreciation calculation:



























Percentage: In the Percentage field, enter the percentage to use for depreciation. The percentage is multiplied by the net book value to calculate the depreciation for the period. This field is not used for all
methods. (Reducing Balalnce)

Depreciation year: In the Depreciation year field, select Calendar or Fiscal.

·       Calendar: Updates the basis for depreciation calculation every year on the first of January.
·       Fiscal: Updates depreciation based on the fiscal year set up.
-   The fiscal year can be longer or shorter than twelve months.
-   When fiscal periods are of different lengths, Microsoft Dynamics AX 2012 adjusts the depreciation amount for each fiscal year.
Period frequency: Period frequency defines the accrual of the yearly depreciation amount. In the Period frequency field, select from the following options.
·       Yearly: The yearly depreciation is posted only one time. On the 31st of December when Calendar is selected for the Depreciation year; or on the last day of the fiscal year when Fiscal is selected for the Depreciation year.

·       Monthly: The monthly depreciation is posted as one-twelfth of the yearly amount each month.
·       Quarterly: The depreciation is posted as one quarter of the yearly amount each quarter.
·       Half-yearly: The depreciation is posted as one half of the yearly amount each half-year.
·       Fiscal period: The total amount of depreciation for the fiscal
·       year is split into the defined fiscal periods.


Full Depreciation means that the asset will be fully depreciated when the service life equals zero.


5. Depreciation Books

You can use depreciation books to track depreciation for tax or other nonfinancial purposes without affecting the General ledger. Multiple Depreciation books can be set up and used to track, for example:
       Federal tax
       State tax
       Alternative Minimum Tax (AMT)
A company can use this feature to set up and run one depreciation method for book purposes and one or more additional depreciation method(s) for tax purposes.








Alternative depreciation profile field, select a depreciation profile, if it is necessary. The alternative depreciation profile is used when two depreciation methods are combined (through statutory
regulations) and a company can post the highest depreciation.

Leave Book Value At: Enter the amount by which to reduce the last depreciation. This keeps the net book value at the amount you enter until disposal. The value that you enter is the residual book value for the depreciated fixed assets. In the case of a disposal due to a sale, the remainder value is set to 0.00.
Select the Create depreciation adjustments with basis adjustments check box to automatically generate depreciation adjustments when the basis of the asset is adjusted with another adjustment type entry.

5. Value Models

Value Models are similar to Depreciation Books, and are required for every FA that is acquired. They from the a model for how the FA will be for valued in the future.

6. Fixed Asset Groups

FA Groups form the centre piece of the set up as they link the depreciation book and value model with a FA Group.





12 comments:

  1. How many value models would you set up per fixed asset? My understanding is that if the depreciable basis (cost) or depreciable life for tax or AMT purposes differs from corporate book purposes, then you need to set up one (or maybe two) additional value models for each fixed asset. Do you agree?

    ReplyDelete
    Replies
    1. Hi,

      You are on the right track. We can make one value model and post depreciation to the current layer and the tax to the tax layer.

      The other option is to make one value model and one depreciation book. Micorosft has made depreciation books for the purpose of reporting only.

      For example in india depreciation is done by two separate acts. The Companies act and the Income Tax Act. The income tax act is used in conjunction with the deprecation boon as it is only calculated for reporting it does not impact our books. Where as normal deprecation which will impact our books is calculated through value models.

      Pleas feel free to ask more questions if this is not clear. :)

      Delete
  2. Varun,

    Do you know if the Automatically create depreciation adjustment amounts with disposal parameter is working properly in 2012 r2?

    ReplyDelete
  3. Hi John, yes this feature will work properly provided your setups are correct.

    ReplyDelete
  4. Hello Varun,
    I do not understand the transactions Dynamics AX generates when activating the Parameter "automatically create depreciation adjustment amounts with disposal". What would be a scenario when this parameter should be activated?
    Hope you can help.
    Thanks,
    Ludwig

    ReplyDelete
  5. hi varun

    want to know what should be the calendar type for value model as per co act and it act.

    ReplyDelete
  6. I would suggest you track the the companies act depreciation via value model and the IT act depreciation with depreciation books.

    The calendar type for CO act should be day based.

    The calendar type for IT act should be fiscal.

    ReplyDelete
  7. Hi Varun,
    Am using AX2012 R3,and am getting the following message when 'You must set up periods for the fixed asset calendar Calendar'. In fact the asset service life is 80 periods=6.67 years , that is not an integer. For all other types whose lifetime year is an integer, there is no issue. Is there any issue with service life year not being an integer? Please guide. Thanks

    ReplyDelete
  8. Hi any reply on the above? I am getting the same error using AX2012

    ReplyDelete
    Replies
    1. Yes this is definitely a bug...if the life has decimals AX is expecting that number of years to exist in the calendar. So if you acquire something in 2016 with a life of 100.5 years AX wants the calendar to go up to 2117...if you change the life to 100 years it does not care what is in the calendar

      Delete
  9. Hi Varun

    I am using AX 2012 R2 and getting 111.11 as depreciation posted when using half year convention method. Acquiring date is 3/15/2017 value 20000, depreciation is for 10 years or 120 months wherein service date and depreciation date is 4/1/2017. An acquisition is posted using transaction date as 5/15/2017 with value 20000. And the depreciation remaining periods are calculating at 117 instead of 118. Please guide. Thanks

    ReplyDelete
  10. HI
    What should be depreciation convention for tax layer?
    Thanks

    ReplyDelete