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Improving Dynamics GP with Hacks : Improving clarity by timing Depreciation Posting to the General Ledger

5/29/2013 4:46:44 AM
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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. 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. 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:

  1. 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.

  1. 4. Select Depreciate on the Financial Area Page. Run depreciation as you normally would.

  2. 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.
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