Normally, there are three scenarios found for booking transactions for Fixed Assets, to book the same in MS Dynamics Ax 2012, the followings could be done.
Three major scenarios:
1. Purchasing an Asset, through Purchase Order, and then Product Receipt, and Invoicing
2. Converting Inventory Items from Stock to Fixed Assets.
3. Purchasing an Asset, electrical and civil work done by own worker for placing the Asset
The steps to do the above requires some prerequisites like setups and parameters in Ax.
Scenario 1: Procurement of a Centre-less Grinding Machine for Rs. 8,50,000.00, through creation of Purchase Requisition, Purchase Order, Product Receipt, and then Invoicing the same. For capitalising the Grinding Machine purchased, a Fixed Asset Card to be created, where value of the newly purchased machine could be updated. Also, add the additional cost incurred for installation, and freight. The installation charges of Rs.15,000.00 paid to a vendor, Freight paid Rs. 8,000.00.
Solution: The above set of transaction suggests that two different kinds of transaction took place, one is Acquisition and another is Acquisition Adjustment. The purchase of the Grinding Machine is Acquisition in Ax and the Allocation of other charges such as the installation charges paid, Freight paid are the Acquisition Adjustment. So, to book all the transaction, the following steps could be taken:
a. Creation of a Purchase Requisition for the Machine, Installation Charges as service
Created a Purchase requisition number 641 for Centre-Less Grinding Machine. Product code for Fixed Asset related to Plant and Machinery is PM-0000001, which is under the Procurement Category - [Fixed Assets].
b. Creation of a Fixed Asset Card, as Grinding Machine
Created a Fixed Asset Card, under Fixed Asset Group – FAPM (Fixed Asset Plant & Machinery). The Fixed Asset Number is FAPM-000463.
c. Assigning the Fixed Asset Card with a proper Value Model
Assigned the Value Model with the Fixed Asset Card, PM-Plant and Machinery. The status showing, Not yet acquired, as the acquisition of the Machine did not taken place.
d. Creation of a Purchase Order for the above requisitions
Select the Approved Purchase Requisitions, and created a new purchase order for the Machine.
In the Purchase Order assigned the Fixed Asset Number related to the Centre-Less Grinding Machine, created in Fixed Asset Card, also the Transaction type is Acquisition.
Then in the same way created another Purchase Order for the Service, Installation of the Machine, as shown below:
e. Product Receipt for the above Purchase Orders
Received the Machine and in the same way received the Installation Charges Service.
f. Invoicing of the Purchase Orders for the Machine and the Installation Charges
After invoicing of the Machinery, in the Asset Card of the Machine, Net Book Value could be noticed as Rs. 8,50,000.00. Also the Acquisition date is 25-09-2014 as shown in the Fact Tab.
On looking into the transaction detail the related Voucher number, Transaction Date, Fixed Asset Number, Transaction Type, Amount could be confirmed as shown below:
Same way the Installation Charges, is purchase invoiced.
If we look into the Fixed Asset Card of the Machinery after invoicing of the Installation Charges, Net Book Value increased from 8,50,000 to 8,865,000 (8,50,000 Plus 15,000), as shown below:
Now the transaction, shown for the Machine is shown below:
g. General Journal for the Freight Charges Paid
Created a General Journal Voucher for the Freight Charges paid on cash, as shown below, where debited the Fixed Asset Card and credited cash account, as cash has been paid for the expense.
In the Posting Profile of the Fixed Asset, the Acquisition, for the value model PM being attached with the main account 1225710 – P & E – Owned (Plant and Equipment Owned), therefore, while posting the transaction for Fixed Asset FAPM-0004463, debited to the main account 1225710. Look into the Voucher, by selecting it from Inquiry Menu Option, as shown below:
The Fixed Asset Posting Profile is shown below:
Now if we look into the Fixed Asset Card, the Net Book Value increased from Rs. 8,65,000 to Rs.8,73,000, as the freight charges is being added into the fixed asset.
If we look into the Transactions for the Fixed Asset Card, there are now three numbers of transaction, as shown below:
h. The main account 1225710 – P & E – Owned (Plant and Equipment Owned), now contains three transaction entries, i.e.
· Cost of the Machine – 8,50,000.00
· Installation Charges - 15,000.00
· Freight Charges - 8,000.00
Scenario 2: A Furnace (project number CP-05-12) is built by using items consumed from the inventory. For this purpose a project code is being issued say CP-05-12. Convert the project CP-05-12 to Fixed Asset.
Solution: In this case material are being purchased and issued to a warehouse named with the project CP-05-12. Therefore, all the material transferred from main warehouse to the project warehouse could be converted into Fixed Assets. If say for example the Financial Year ends before the conversion, then the balance sheet must show the value allocated in the project as Capital Wok in Progress as asset. Therefore, while transferring the inventory item from main warehouse to the CP-05-12 warehouse, financial transaction must be generated, so that the Stock Account must be deducted and Capital Work in Progress must be added with the value of the item.
a. Creation of a Purchase Requisition for the Material required for creating the Asset, Making Charges as service
Different Purchase Requisition for different items and services were created in the same way as shown in the scenario 1. The list of items required for built the Furnace shown below (imaginary for example):
· MS Sheets – 4000 kg - IRN-00025
· MS Angles – 500 kg – IRN-00026
· Bricks H.A. 60% – 2000 pcs - REF-00021
· H. A. Filling Mass – 100 kg REF-00039
· H. A. Mortar Powder – 50 kg - REF-00038
· Ceramic Tube – 200 m - REF-00034
· Kanthal Wire – 5 Rolls - ELE-00006
· Insulated Wire – 500 m - ELE-00003
· Switches 15 A – 10 pcs - ELE-00007
· Fabrication Job - SVC-00008
· Mason Job - SVC-00009
· Electrical Installation Job - SVC-00010
· Installation Charge - SVC-00004
b. Creation of a Warehouse, named CP-05-12
c. Creation of a Purchase Order for the above requisitions
Created a Purchase Order and did not marked it as a Fixed Asset.
d. Product Receipt for the above Purchase Orders
Received the Products against the Purchase Orders.
e. Invoicing of the Purchase Orders for the material and the Installation Charges
Invoiced the Purchase Orders for the Materials and the Installation Charges. The installation charges to be transferred to the Capital Work in Progress – 1221000, so that expenses could be capitalised.
f. Creation of a Fixed Asset Card, as Induction Furnace
Created a Fixed Asset Card, FAPM-000432, Induction Furnace.
g. Assigning the Fixed Asset Card with a proper Value Model
Assigned a Value Model as PM – Plant & Machinery
h. General Journal for the Freight Charges Paid – Debit to the Capital Work in Progress – 1221000
Created a Journal Voucher for payment of the Freight Charges, for the Furnace Project CP-05-12.
i. Transfer of Material from the Main Warehouse to CP-05-12 Warehouse
j. Convert the Inventory to Fixed Assets
To capitalise and add the incidental expenses to the Fixed Asset Card, FAPM-000432, Induction Furnace, created a General Journal entry, as shown below:
k. Look into the Financial Transaction, Inventory Transactions, Fixed Asset Card
The Fixed Asset FAPM-000432 – Induction Furnace, has a Net Book Value of Rs. 11,17,250.00
On looking into the Transaction – Fixed Asset Transaction, clearly could be noted that all the individual entries are booked into the Fixed Asset as Transaction Type – Acquisition.
This is also evident from the Main Ledger Account 1225710 – P & E – Owned, which suggests that the transactions are booked into the Main Ledger Account.
