Fixed Assets Overview

This chapter describes the Fixed Assets module in Maconomy. You use this module to manage company assets and to generate lists and reports used at the closing of the fiscal year.

The Fixed Assets module enables you to enter individual asset purchases. These are used to automatically calculate depreciation; you can manually enter improvements, write-ups, write-downs, and depreciations. You can also sell assets and transfer assets to and from different asset groups.

Introduction to the Fixed Assets Module

There are legal and practical reasons for entering assets in a separate system. The law has made it compulsory for companies to keep detailed accounts of fixed assets and depreciation. The various transactions that are made during the life of some assets have direct effect on the year-end result, which is why they must be properly documented. Therefore, you should not delete entries that are related to fixed assets until the asset is no longer in use and the audit documentation retention period has expired. Using the Fixed Assets module, you can keep structured, thorough control of your fixed assets.

Companies have a basic legal duty to enter assets that they have purchased for long-term usage. These assets are known as fixed assets, for which accounting laws set out precise and comprehensive rules for depreciation, write-ups, write-downs, and other transactions.

Assets of similar character or purpose are sorted into asset groups. The law has defined various asset groups for the purpose of reporting year-end results, but there are no legal hindrances to companies to categorize their assets in greater detail.

After you enter the assets in Maconomy, they are depreciated over a number of years, that is, the life span of an asset. Maconomy depreciates the assets automatically, whereas you enter transactions, such as write-ups and write-downs manually. As long as the asset is not sold or otherwise cast off, you must keep its records in the system, as required by law.

The law also requires full documentation of all transactions made during the life of an asset. Maconomy keeps a record of every transaction made and cannot delete these records before the legal requirement for documentation is relieved.

The structure of the information contained in the Fixed Assets module is divided into the following levels:

1. At the top level are the asset groups, which represent assets of a similar character or purpose.
2. At the second level are the actual assets that are assigned to an asset group.
3. The third level contains the entries that describe the transactions that have been performed for the asset.

The asset groups have two purposes. One is to sort the financial transactions for the assets in the group; the other is to ensure full integration with the general ledger. The grouping of assets is required by law in some countries, because the total number of transactions that are represented in the group is used when accounts are closed at year end. Integration with the general ledger is ensured by attaching each type of transaction to a separate G/L account.

All assets are associated with a company. Whether a given user can see a given asset depends on whether he or she has access to the company to which the asset belongs. This applies to both the asset information card and any entries that are related to the asset in question. Note that this access control model only applies if you have not changed Maconomy's standard access control configuration. If you have, access to assets may depend on other factors. For more information about the standard access control configuration, see "Introduction to the Access Control System" in the Set-Up module.

In the Users workspace in the Set-Up module, you can attach a user to a company. You can assign an access level to each company in the Company Information workspace in the G/L module.

A company must typically be able to document the life of an asset. This includes two types of documentation:

• Entries to the asset.
• Changes to the asset.

Maconomy prevents any asset entries from being deleted during the legal lifetime of the asset. Maconomy also complies fully with the second requirement by ensuring automatic control of any changes in vital information about the assets. The following data is recorded:

• The time of the change.
• The user who was responsible for the change.
• The name of the field that was changed.
• The value of the change.
• The value after the change.

You can view asset changes in the Asset History workspace, where you can enter a note for each change. This provides full documentation for all changes to the assets.

The Fixed Assets module is integrated with the General Ledger module, which implies that all amount transactions performed for an asset are posted to the G/L accounts that are identified by the asset group and asset transaction type. This occurs during the posting of the asset journals, which are created when you approve asset adjustments.

For every asset group, you must specify which G/L accounts are to be used when posting transactions for the asset members. You must also enter the text that the G/L entries are to carry. This makes it easy to manage which G/L accounts are used for the individual asset groups and asset transaction types.

In day-to-day administration, assets are the central concept and foundation for all transactions. When you purchase an asset on a long-term basis, you must enter it in the Fixed Assets module. You do this in the Assets workspace, where you can enter a wide variety of information about the asset. A large part of the information is of a non-financial character. The purpose of having this information is to ensure proper documentation of the asset. The remainder of the information pertains to the life (depreciation period) of the asset, depreciation method, residual value, and the non-depreciable part of the purchase price. The residual value is the amount to which you want to depreciate the purchase price. The residual value can also be perceived as the price that you expect to be able to sell the asset for, after the depreciation period is over.

You enter the purchase price (cost) by creating a transaction of the type Purchase. You enter a purchase transaction in the Asset Adjustment workspace in the same way as other manual transactions. This happens if you enter a cost price when you create the asset, or it can happen later, by entering an asset adjustment after you create the asset.

After you enter the transaction, the only change that typically takes place for an asset is depreciation. Normally, the depreciation is generated automatically; this takes place in the Depreciation Adjustment workspace, where you enter the date on which you want to start depreciating. Maconomy then creates a depreciation adjustment suggestion, which you can view and edit manually in the Asset Adjustment workspace. After you have finished editing the asset adjustment, you approve it. This updates the information that is attached to the asset. At the same time, Maconomy creates a posting journal of the type Asset Journal, which you must post in the G/L module.

Occasionally you might need to make extraordinary write-ups, write-downs, depreciation, and corrections to previous years' depreciation. You do this in the Asset Adjustment workspace, where you can create entries manually. An improvement in an asset typically results in a manual entry that is similar to a new purchase.

There are four types of transactions that you cannot select manually in the Asset Adjustment workspace: Sale, Internal Sale, Relocation, and Transfer. You create these types of transactions in the Asset Disposal workspace.

If you want to change the physical location of one or more assets in the company, or if you want to sell assets to another department in the company or a subsidiary, and such a company is considered to be a separate legal entity, you might want to do so by relocating/selling the current assets internally. You change the physical location of an asset by redefining the asset's dimension and user information, including the asset's company association. You perform asset relocation transfer and sale in the Asset Relocation workspace.

If an asset is internally relocated, that asset's user information and dimension values are changed according to the specifications that you provide. However, this does not mean that an asset is created; instead, the company association of the asset and other dimension values are redefined. The remaining standard information is not changed. When you relocate assets between two companies, you create the necessary inter-company balances in the G/L module, unless you do not select the Create intercompany entries for companies with same parent company system parameter, and the two companies involved are both assigned to the same parent company.

When you enter the asset changes and the necessary G/L entries, Maconomy creates an asset adjustment of the type Relocation, which is automatically approved. The approved asset adjustments are displayed in the Asset Adjustment workspace. When approving an asset adjustment, Maconomy also creates a posting journal of the type Asset Journal, which is then posted in the G/L module.

If you sell an asset internally, you remove the asset from the company that is selling it and create an asset in the company to which the asset is being sold. The new asset is treated like an acquisition, and its sales price is the book value that you enter at the time of the sale. The company that is selling the asset must ensure that possible depreciations are performed before the sale is completed. The company that is buying the asset takes over the depreciation period and the depreciation method from the company that is selling the asset.

At the same time, Maconomy creates an asset adjustment and automatically approves it. The entries in such asset adjustments are of the type Internal Sale. The approved asset adjustments are displayed in the Asset Adjustment workspace. Maconomy also creates an asset journal to be posted in the Posting workspace in the G/L module.