Microsoft Dynamics provides a robust Fixed
Asset module for tracking and depreciating a company's assets. Part of
the Fixed Asset module includes a routine to process asset additions,
retirements, and depreciation through to the general ledger. This GL
Posting routine sends all of the related asset transactions to the
general ledger as a single transaction in a single batch.
When firms make errors with fixed assets it is almost
always in the addition or retirement of an asset. The key to preventing
errors is to review fixed asset transactions prior to posting to the
general ledger. Depreciation amounts are small enough in relation to the
value of an asset that depreciation errors for a single asset typically
won't be material to the company's financial statements. New assets,
however, can represent millions of dollars in value and can affect the
correctness of a firm's financials.
Typically, companies have a small number of
asset additions and retirements in any given month when compared to the
number of assets being depreciated. Even high-growth firms rapidly
acquiring assets will quickly have more active, depreciating assets than
new assets. Since Dynamics GP aggregates all of the Fixed Asset
transactions into a single general transaction it can be difficult to
review asset additions and retirements for correctness when they are
mixed among hundreds or thousands of depreciation entries waiting to be
posted.
Unfortunately, there is no magic code or hidden
feature to solve this problem but there is a process that users can
follow to ensure that asset additions and retirements are processed
separately from depreciation. The process is to create two general
ledger transactions, one for depreciation and one for everything else.
This makes it much easier to verify the correctness of additions and
retirements. In this recipe, we'll look at how to separate the posting
of Fixed Asset additions and retirements from Depreciation.
Getting ready
The basic operation of the Fixed Asset module isn't
the focus of this recipe so we'll assume that asset additions and
retirement transactions have been processed, but that both depreciation
and the GL Posting routine have not been run for the month.
How to do it...
To separate fixed asset additions and retirements posting:
1. Before running depreciation for the month, select Financial from the Navigation Pane. Select GL Posting under the Routines and Fixed Assets headings on the Area Page.
2. Leave the Beginning Period as all zeros (0000-000) and set the Ending Period to the appropriate period. Usually the Ending Period is the previous or current month. In the sample company use 2017-004. Click on Continue:
3.
The resulting GL transaction will have only additions, retirements, and
transfers, creating a much smaller number of transactions to review
prior to posting:
This process can be segregated
even more by sending transactions to the general ledger after processing
each type of transaction for additions, retirements, and transfers.
4. Select Depreciate on the Financial Area Page. Run depreciation as you normally would.
5. Repeat the GL Posting process to process depreciation transactions to the general ledger in a separate batch.
How it works...
Separating non-depreciation transaction posting from
the posting of depreciation provides greater clarity to additions,
retirements, transfers, and depreciation. Less common transactions are
not mixed in with depreciation, making it easier to ensure that asset
additions, retirements, and transfers post to the correct accounts.
There's more...
Though this process works consistently depreciation doesn't have to be posted after other transactions. There is another option.
Timing Depreciation posting
The key is that depreciation can be posted
before or after other fixed asset transactions are entered, just not in
the middle. For example, a company can run and post depreciation at the
start of a new month and then enter and post asset additions,
retirements, and transfers. Finally, the company can re-run depreciation
at month end to depreciate only new and changed assets.
