Fixed assets accounting in SAP ERP include: Fixed asset transactions,Collect notes, cash documents,Record the increase/ decrease of FA,transfer of FA,transaction of construction in progress
1.Fixed asset transactions:
Fixed assets transactions include:
- Manage construction in progress
- Asset addition transactions: purchase, finished construction
- Asset disposal transactions: Sales, disposal, transfer to scraps warehouse
- Transferred asset transaction: transfer fixed assets from one department to another.
- Construction in progress: collect expenditures incurred during CIP
- FA depreciation: using straight line depreciation method.
All relevant data to FA are managed in excel file
Currently, there are about 4000 items of asset which are divided into 5 categories: building – structure, machinery and equipment, means of transportation – transmitters, equipment and devices management, others. Asset tags are recorded in ascending sequence, not coincidentally
Asset attribute information includes:
- Group of assets
- Name of assets
- Tag assets number
- Asset account
- Expense account
- Book value
- Monthly depreciation
- Accumulated depreciation
- Residual value
- Resource of capital
- Date of using/started date
- Maximum year of depreciation
- Minimum year of depreciation
- Month of increase of assets
- Month of decrease of assets.
- Asset categorization
- Asset management department
- Usage purpose
- Location of assets.
- Country of production
- Year of production
- Document related to assets
- Asset status (mortgage, loan, pledge, damage, waiting for liquidation)
- Type of loans
- Bank of mortgaged assets
Pledged assets, finance leased assets are monitored separately in excel file. Fire insurance of the asset is monitored in excel file.
2.Collect notes, cash documents
- Collect notes, cash documents, cash in bank, raw materials, payable documents from relevant business departments relating to the increase and decrease of fixed assets and construction in progress.
- For new purchased assets: all documents are collected by payable accountants and transferred to fixed assets accountants. Relevant documents include invoices, contracts, quantity control minutes, and delivery notes.
- With imported assets: import department transfers relevant import documents
- With the decrease of fixed asset transaction: head of department write an approval email, notice of tenders, tenders result minutes.
- With transferred assets: all related department will provide transfer notes to FA accountant
- Inventory accountants will transfer files of inventory issued notes relating to basic construction to fixed asset accountants.
- Cash, banking accountants transfer data and documents relating to equipment purchase, expenditure relating to construction.
- Construction in progress:
o Accountants of cash, banking, inventory transfer data of expenditure for construction in progress to fixed assets accountants. Expenditure is collected according to project /asset
o Departments prepare cost calculation when the project is completed (for construction).
o Currently, construction expenditures are not collected exactly, fixed assets accountant just recognized expenditures according to those provided by operating accountants
4.Record the increase of FA
The increase of FA is recognized upon receipt of quantity control minutes , assets transfer documents, finalization of FA construction For the increase of FA due to adjustment: record the increase in the period of adjustment, depreciation on total balance amount at that time
5.Record the decrease of FA
Accounting for total balance amount of the FA.
6.Record the transfer of FA
Debit FA account of target department.
7.Record transaction of construction in progress.
- Construction expenditures are summarized by asset, project; and categorized by assembling, equipment and other expenditures
- Construction in progress is capitalized purchasing invoices, contracts, finalization form of construction and quality control minutes.
Periodical depreciation is manually calculated in excel files. It is difficult to maintain depreciation functions for many month in excel file.
9.Generate FA depreciation
Generate FA depreciation cost allocation worksheet by division.Provide FA depreciation cost allocation worksheet by division to costing accountant, general accountant and knitting division. Collect data and information and book debit/credit entries in FA sub-ledger
10.Provide reconciled data to relevant units about FA
Reconcile FA data with cash, banking, receivable, payable, inventory accountings. Reconcile data with general accountant about the total value of FA and depreciation.
11.Prepare FA, construction in progress reports during the period
- Journal of increase and decrease of assets
- FA depreciation report
- Depreciation allocation worksheet by department.
- Details and summary of construction expenditures by project, type of expenditures.
- Transfer data to general accountant