Fixed Asset Process Acquisition, Depreciation and Disposal sale

hi all uh today i'm going to uh discuss about fixed asset process in

d365 and how the acquisition will post a

depreciation and disposal sale i am going to explain how it will work and

what is the impact in the gl accounts as well as trial balance and balance sheet so i already taken one

of the example to explain to uh to you uh so

so first of all we need to create uh five gl codes

uh five main accounts so to do this

testing and to do the entire process of fixed assets so

so then after that we need to post acquisition entry depreciation entry as well as

disposals sale so i'm going to

add here

let me color it something

so at the time of see normally you will go with uh entire

concept and the entire discussion in this excel whatever i prepared and same will execute in d365

as well so acquisition at the time of acquisition uh

asset will be debate and uh cash account will be credit so i am

purchasing this building from cash account so cash will be the credit as per uh real

account what comes in debit and what goes out is credit so it is debiting and crediting

here and depreciation entry

so for depreciation depreciation account data to accumulated depreciation it will

book and at the time of disposal uh for

example this asset i am selling for 12 000 and [Music]

so after one month only i am selling this set so accumulated depreciation has to

reverse to asset uh set value has to be in nullify

uh so 10 000 to profit and loss of count it's supposed to go 2083.33

so calculation of depreciation it will calculate like this so i am using strikeline uh service life

so asset value is 10 000 straight line 10 years life

10 years life so depreciation per year is 10 000

divided by 10 and depreciation per month is per year depreciation is thousand

divided by 12 per monthly depreciation is 33.33

so trial balance will look like this at the starting uh there is no opening

balance for these accounts as well as debit and credit also need and even closing balance also need

so one more thing uh see if profit and loss account how it

will behave only there is only this building transaction then balance sheet how it will looks

so profit and loss account we have only depreciation in expense side 83.33

and profit and sale of asset is to 2083.33

in balance sheet we can uh see these are the assets first of all

cash entry it's went uh it's credited so minus value are given

in the asset side and the cash account uh when we sell that asset we got 12 000

cash so i gave it i given an a positive value and the building at the time of purchase

10 000 value at the time of sale i given negative value so building will

be zero at the time of sale building a value supposed to be nullified so it is

nullified and coming to liability side we have accumulated depreciation

when depreciation run at that time and at the time of uh

disposal it got reversed and i used uh positive or negative signs so this is

also nullified at the time of sale uh we can see here billing value also

nullified to 0 as well as accumulated value also accumulated depreciation also

nullified then net profit whatever the net profit we got in the penal account it's moved

to here liability set so total balance sheet is 2000

so we'll take this example and we'll

do the setup in d365 and will execute this entire scenario in d365 how the system

behaves and what is the setup we need to do to pose the entries for acquisition

depreciation and disposal so first of all i'll go to d365 and

i'm in usm company first step i'm going to create

gl accounts for these

main accounts so new one so i'm using the sub account here

so i'm i'm giving car as

i'm not using building it's called

i'll use car here as well balance sheet instead of building i am taking call

anyway any other place i need to change

color

okay that's it right so let's move to here

so car is a set account so change it to a set

next next account i am creating is accumulator depreciation

or accumulated depreciation is liability

and sale of asset

sale of car i'll give as a description for easy recognition purpose

profit and loss of content viewing and next account is

depreciation for car i'll give same way for easy recognition purpose

and minor contact use expense so last uh

but not least i'm creating one cash account also

cash account

so it is a set account so

we have created all the how many five main accounts

required for fixed asset uh process

and next i am moving to fixed asset module

and in fixed asset module we we need to see depreciation profile

so i'm creating new one

sl sl car will give

slightly service life for car i am giving method we need to select here

so it is straight line service life and depreciation i want monthly

so i'm just saving this and next i'm moving to

books

so in books i'm just creating new one

sl sl car

so [Music] and enabling this calculate depreciation

and i am assigning this whatever the depreciation profile we just created

so i'm just saving this

and i am not giving any derivative books i am just concentrating on the

process of acquisition depreciation and disposal

not layers so this is current layer i am looking for current layer only

so then i am just creating one more fixed asset group

i am giving car so

i'm using auto fixed asset number

i'm going to create one number sequence

for the asset

i am reducing to four digits

and i'm enabling continuous and i am reducing here to

four digits is the largest one so i'll make here car

and i am assigning books to this particular

particular

group fixed asset group just as end and i'm giving service life here 10 years

and whatever the depreciation profile you have selected for this book it's

assigned here so

let's move let's move on to

one minute i'm getting called hello

hmm

sorry i got one call

so we did uh these

books now then moving to fixed asset posting profile

this is the place where we need to set up the main account for

for the system to pick the pick for posting whether it is acquisition depreciation or

sale so let's

do it for acquisition transaction i'm assigning

so we need to select our book

and main account is supposed to be our asset account

called offset account i am not providing because uh normally acquisition will happen based

on like uh based on the requirement like if we purchase through cash we'll give

the cash account if we're purchasing through uh retained earnings we'll give you the

retained earnings and if you are using bank account as well you

can use bank account so no need to mention default account here

so i'm not giving that then moving to

the acquisition adjustment also same setup so i'm not providing to understand

the concept i'm going with simple scenario so depreciation

for depreciation i am assigning the main accounts i am

selecting the book and here we need to select the

accumulated depreciation accumulator depreciation number is 236

level 6 and offset account should be your depreciation count

what is the depreciation account 4 3 6 and level 6

then let's go to depreciation adjustment

add

so i'm giving in the same way like two double six two three

adjustment as well so accumulated depreciation and

depreciation account i'm just saving this

oh i selected

so now i'm selecting here i'll go with the disposal scale

i'm just adding your

account for disposal what is the account

for disposal say three triple six level six

so i'm using this i've set up one morning it

what is the posting profile so select the

group select the book and depreciation prior here anyway i'm

taking only for this here so i'm giving only this here

so its main account depreciation supposed to be

depreciation accumulated depreciation so

so give that accumulated depreciation needs to reverse right so

give that number and offset account should be

your asset account you need to reverse it back to your asset

so that's it is this one and same way

select the book depreciation adjustment this year

so same procedure

okay then

select the book and netbook value you need to

reverse it so for netbook value you need to move back to

movie to

profit or loss account i

okay so this is the setup if you check what and all the

setup we given is

filter by our book so this is the setup so for depreciation

anyway we are posting for only one month depreciation so that's why i take an only depreciation this year

if you are posting more than one year you can take depreciation previous year also same setup you can give the

accumulated depreciation in main account and offset of counties

you are a set account then net book value you need to reverse back your asset

value so asset main main account will be the asset account and uh it's supposed to move to

uh profit on sale of depreciation adjustment also in the same

way like depreciation so this is the setup

so let's create one asset now

i'm just

[Music] okay i'm just refreshing this trial balance

so there is no postings for this account so it is not showing it up

let's go to fixed assets

if you select this fixed asset group automatically number will come because

we have selected our two fixed asset number in the fixed

asset group where we selected you can go to fixed asset

groups and car is your group is selected here

and we assign that this is the number sequence so based on that number sequence number is

generating so for asset creation i am not giving any

other details these are all asset information technical information

insurance these will be provided by the user will fill this data

so i'm not going to touch that so if i click books

the for the car this is the book assignment to this

particular cara set so this is the book and depreciation profile is this

and life of the set is 10 years and 120 periods and posting profile is all see

now it is not at acquire status if you click balances

you can see the values as of now there is no values because of

uh he didn't acquire this set till now it is still

not at acquired status so this is the balance let's go on post

one transaction for this asset acquisition

let's do it so i am selecting one of the journal

name and clicking on lines

so i'm posting on

november 1st acquisition select your

set and 10 000 is

our asset value as per excel sheet we are going and

i using cash account for purchasing this asset

so cash account is this one okay

so just posting this entry

it's got posted so if you want to see the voucher you can see here call is debited and the

cash is credited if you go to trial balance and refresh it

and take these accounts and fill it out see

your cash account is credited with 10 000 and car account is

debited with 10 000 okay so

now now what is the car account is debited

with 5000 sorry 10 000

and cash account is credited with 10 000

and you can see the closing balances as well uh ten thousand

and minus ten thousand so this is what we updated in the

balance sheet as well minus 10 000

from the trial balance it will go right so minus 10 000

as a cash account and core 10 000 as a positive debit account

debit amount sorry okay let's go and check your asset as well

how it's changed you can check that asset

go to books you can see status it went to open status previously

it is not at a question if you click on balances there will be a balance for acquisition and net book

value is 10 000 okay so this is the

after the position posting this is the checkups we did

so entry is this so we covered this entry right

and i explained here as well balance sheet how it will impact and trial balance

also i explained then

move forward to post the depreciation entry

let's take new one

lines i'm deleting this line and running the proportional

duplication proposal so for 11 30 and i want to

do for one asset so

let's take that that's it from here

okay so click on ok and running the depreciation

see eight thirty three point three three is our calculation as well

so ten thousand is the asset value straight line like service life ten

years then per year thousand rupees and per month 833 83.33

so that is what system calculated based on depreciation profile and method of depreciation

so let's post it

okay it's posted you can go to trial balance refresh it

and filter by your accounts

to check what is the trial balance impact

see now in its when to accumulate a depreciation and

depreciation depreciation is debited and accumulated depreciation is credited

this is the entry rate we are expecting yes so

let's see so entry part it is cleared and i'm going to

balance it as well accumulated depreciation so liability side it scheme

okay this is the one it's booked 83.33

and depreciation in panel account it is expense rate it's booked on profit will also

okay if you go to trial balance it is accumulated depreciation is

83.33 credited and depreciation is sorry

debit balance 83.93

so 83.33 and 83.33

okay okay

then go on go to that particular asset and check the values

see 83 depreciation calculated and net book value is this

okay you can check depreciation run date as

well date when the depreciation last run is 11 30

placed in service is 11-1 okay so let's move

move on to disposal entry

so i'm december 1st i am going to sell this and

asset so which one is my asset car is my asset

this is the one i am selling for

12 000 as per my excel sheet so i am using

cash account for selling this asset

okay so let's post it

okay it's got posted and you can refer your trial but next you

need to check your trial balance right so check it

filter with your accounts

so see now

car is credited with 10 000 as well balance will be

okay balance is zero in car account go