Fixed Assets - Series 3: Depreciation Books - Microsoft Dynamics NAV

Fixed assets must have a depreciation book to record depreciations to the fixed assets.

(These series are based on Microsoft Dynamics NAV 2017).

Set up depreciation books on the depreciation book card. To open the list of depreciation books in the navigation pane, click Departments > Financial Management > Fixed Assets > Depreciation Books. In the Depreciation Book List window, select the COMPANY depreciation book and then click Edit.

You can set up multiple depreciation books to accommodate your business needs (such as tax and financial statements).

After you have set up depreciation books, you can attach one or more depreciation books to an asset, and then set up additional information in the FA Depreciation Books window. For each depreciation book, you must define the terms and conditions, such as integration with general ledger. (If a depreciation book is integrated with the general ledger, all transactions posted to that depreciation book are also posted to specific general ledger accounts.)

To Set up a new depreciation books, click Departments > Financial Management > Fixed Assets > Depreciation Books. The Depreciation Book Card contains four fasttabs:

·         General Fasttab

·         Integration Fasttab

·         Duplication Fasttab

·         Reporting Fasttab

Fill in the following fields: (Not all are mandatory)

General Fasttab

·        Code: This field contains the code of the depreciation book that identifies it in the program. For example, STANDARD.

·        Description: Specifies the purpose of the depreciation book. Such as Steel Company Book.

·        Default Final Rounding Amount: This field contains the final rounding amount to use if the Final Rounding Amount field in the FA Depreciation Books window is empty. If the remaining book value after the last calculated depreciation is less than the amount in this field, the remaining value is added to the last depreciation. This makes sure that the fixed asset is fully depreciated over its depreciable lifetime.

·        Default Ending Book Value: This field specifies the ending book value to use if the Ending Book Value field in the FA Depreciation Books window is empty. This feature prevents the asset from being fully depreciated. The ending book amount is subtracted from the last depreciation to prevent a book value of zero. If the book value is greater than zero after the last depreciation, for example, because of a rounding problem or because a salvage value exists, the ending book value is ignored.

·         Disposal Calculation Method: This field defines the method of disposal calculation. Select the field to select one of the following two methods: Net: The program calculates the profit or loss and then posts this amount to the gains on disposal account or the losses on disposal account. Gross: The profit or loss is not posted to a single amount. Profit or loss is the difference between the opposite entries to the sales account on disposal (credit) or book value on disposal (debit).

·         Subtract Disc. In Purch. Inv.: When this check box is selected, the line and invoice discounts are subtracted from the acquisition cost posted for the fixed asset. The line and invoice discounts are posted to the account contained in the Purch. FA Disc. Account field in the General Posting Setup window.

·         Allow Correction of Disposal: Select this check box if you want to correct fixed ledger entries of the type Disposal or cancel entries connected with disposal.

·         Allow Changes in Depr. Fields: When this check box is selected, the depreciation fields in the FA Depreciation Books window can be changed after you have posted entries.

·         VAT on Net Disposal Entries: Select this check box when you sell a fixed asset with the net disposal method. In this case, the VAT fields in the general ledger entries will be filled in.

·         Allow Identical Document No.: Select this check box if you want to allow identical document numbers in the depreciation book.

·         Allow Indexation: Select this check box if you want to allow indexation of FA ledger entries and maintenance ledger entries that are posted to this depreciation book. Afterward, the Index Fixed Assets batch job indexes the fixed assets, which are linked to a specific depreciation book. The batch job creates entries in a journal based on the conditions that you specify. You can then post the journal or adjust the entries before posting, if it is necessary.

·         Allow Depr. Below Zero: When this check box is selected, the program continues to calculate periodic depreciation when the Calculate Depreciation batch job is running even if the book value of the fixed asset is zero or negative.

·         Allow more than 360/365 Days: When this check box is selected, the fiscal year can have more than 360 depreciation days. If you do not select this check box and the fiscal year has more than 360 days, the program displays an error message.

·         Use FA Ledger Check: When this check box is selected, the program performs the following checks before posting a journal line: • Acquisition cost is the first entry (when the FA posting date is used). • Acquisition cost is entered as debit (when the FA posting date is used). • Disposal, if any, is the last entry. • Book value has a debit balance unless the Allow Depr. Below Zero check box is selected on the depreciation book card. • Accumulated depreciation, salvage value, and accumulated sales price are all credit balances. • Write-down, Appreciation, Custom 1, and Custom 2 entries match the setting in the Sign field in the FA Posting Type Setup window. If you clear this check box, the program performs only the first two checks : • Acquisition cost is the first entry (when the FA posting date is used). • Acquisition cost is entered as debit (when the FA posting date is used).

·         Use Rounding in Periodic Depr.: When this check box is selected, the program rounds depreciations to whole numbers.

·         Use Same FA+G/L Posting Dates: When this check box is selected, the posting date and FA posting must be the same on a journal line before posting. If you do not select this check box, you must enter both dates separately.

·         Fiscal Year 365 Days: If you select this check box, the Calculate Depreciation batch job uses the calendar year of 365 days instead of the standardized year of 360 days.

Fig 1: FA Depreciation Book - General

Integration Fasttab (G/L Integration)

The Integration FastTab specifies entries to integrate with the general ledger. For each depreciation book, you can define what kind of transactions or posting types that you want to be integrated with or posted to the general ledger. You can also choose to integrate the different kinds of FA postings to G/L per depreciation book, because Microsoft Dynamics NAV 2017 lets you select which specific posting that you want to be integrated in a depreciation book. The company makes its own decision about how to set up depreciation books and whether using multiple depreciation books is suitable for the business.

Select the fields of the relevant posting type or types of FA transactions that should integrate with the general ledger.

If G/L integration is set, the specified transactions are posted by the FA G/L journal. If G/L integration is not set, the fixed asset transactions are posted by the FA journal.

·         Acquisition Cost

·         Depreciation

·         Write-Down

·         Appreciation

·         Custom 1:

·         Custom 2:

·         Disposal

·         Maintenance

Fig 2: FA Depreciation Book - Integration

Duplication Fasttab

Use the Duplication FastTab to indicate duplicate entries in other depreciation books.

Duplication is useful when a company uses multiple depreciation books. When duplication is set up, Microsoft Dynamics NAV 2017 creates the same entries for all the books. This reduces data entry time.

·         Part of Duplication List: Specifies whether to indicate that entries made in another depreciation book should be duplicated to this depreciation book.

·         Use FA Exch. Rate in Duplic.: Specifies whether to use the FA Exchange rate field when you duplicate entries from one depreciation book to another.

·         Default Exchange Rate: Specifies the exchange rate to use if the rate in the FA Exchange rate field is zero.

Fig 3: FA Depreciation Book - Duplication

Reporting Fasttab (Use Additional Currency exchange rate)

You can set up whether an additional foreign currency rate is enabled for the transactions posted to this depreciation book.

·         Acquisition Cost

·         Depreciation

·         Write-Down

·         Appreciation

·         Custom 1

·         Custom 2

·         Disposal

·         Maintenance

Records Acquisition Cost or Depreciation or write down or appreciation or Custom 1 or Custom 2 or disposal or maintenance Transactions in the general ledger in both LCY (Local currency) and any additional reporting currency.

Fig 4: FA Depreciation Book - Reporting

FA Posting Type Setup

Set up the FA posting types to define how Microsoft Dynamics NAV 2017 manages the Write-down, Appreciation, Custom 1, and Custom 2 posting types that are used when you post to fixed assets. Write-down is used to write down an asset when its value has decreased. An example is a machine that is damaged but can still be used. The book value of a fixed asset is reduced by posting a write-down entry. Appreciation is an increase in the value of a fixed asset, typically land and buildings. It can also be used for a fixed asset such as an oil platform, for which value increases because of an increase in demand for the item. For each depreciation book, you can set up how you want to handle various FA transactions for each FA posting type. For example, you can configure whether the posting should be a debit or credit and whether the posting types should be included in the depreciable basis or if it should be part of a gain or loss calculation.

When you create a depreciation book, Microsoft Dynamics NAV 2017 automatically creates a default setup of four lines (one for each FA posting type) in the window. You cannot add or delete lines on this page. However, the existing lines can be changed if it is necessary.

To open the FA Posting Type Setup page, in the Depreciation Book Card window, click the Navigate FastTab, and then click FA Posting Type Setup.

The FA Posting Type Setup window contains the fields for each FA posting type

·         Part of a Book Value: Select this field to specify that entries posted with the type in the FA Posting Type field will be part of the book value.

·         Part of Depreciable Basis: Select this field to specify that entries posted with the type specified in the FA Posting Type field will be part of the depreciable basis.

·         Include in Depr. Calculation: Select this field to specify that entries posted with the type specified in the FA Posting Type field must be included in periodic depreciation calculations.

·         Include in Gain/Loss Calc.: Select this field to specify that entries posted with the type specified in the FA Posting Type field must be included in the calculation of gain or loss for a sold asset. The gain or loss is calculated in the Gain/Loss field in the FA Depreciation Books window.

·         Reverse before Disposal: Select this field to specify that entries posted with the type specified in the FA Posting Type field must be reversed (that is, set to zero) before disposal.

·         Acquisition Type: Select this field to specify that entries posted with the type specified in the FA Posting Type field must be part of the total acquisition for the fixed asset in the Fixed Asset - Book Value 01 report.

·         Depreciation Type: Select this field to specify that entries posted with the type specified in the FA Posting Type field must be regarded as part of the total depreciation for the fixed asset. Usually Depreciation, Write- Down, and Custom 1 are regarded as depreciation types.

·         Sign: Select this field to specify whether the type in the FA Posting Type field (Write-down, Appreciation, Custom 1, or Custom 2) on this line should be a debit or a credit. Select the field and select one of the options Blank, Debit, and Credit. When posting elsewhere, Microsoft Dynamics NAV 2017 checks that the amount to be posted to the FA posting type is entered correctly, as either a debit or credit, according to what you have defined in this field. Value Blank means that no check is performed.

Fig 5: FA Posting Type Setup

FA Journal Setup

The FA Journal Setup page in Microsoft Dynamics NAV specifies the default setup of the FA general ledger journal, the FA journal, and the insurance journal templates and batches that you can use in Microsoft Dynamics NAV 2017 when you have to duplicate lines from one depreciation book to another, create journal lines by running a batch job such as the Calculate Depreciation or Index Fixed Assets batch jobs, and duplicate acquisition-cost entries in the insurance journal.

To open the FA Journal Setup page, in the Depreciation Book Card window, click the Navigate, and then click FA Journal Setup.

Fig 6: FA Journal Setup

Depreciation Book Card Batch Jobs

On the depreciation book card, you can run the following four batch jobs:

Create FA Depreciation Books – automatically creates the necessary depreciation for one or more fixed assets. You can create empty fixed asset depreciation books, for example, for all fixed assets, when you set up a new depreciation book. You can also use an existing fixed asset depreciation book as the basis for a new book.

Copy Depreciation Book – copies entries as a batch job from one depreciation book to another. The entries are not posted to the new depreciation book—they are inserted as lines either in the FA G/L journal or in a FA journal, depending on whether the new depreciation book has activated G/L integration.

Cancel FA Ledger Entries – cancels an incorrect depreciation entry if you posted incorrect fixed asset transactions. Later, you can post the correct amount of depreciation by running the Calculate Depreciation batch job again. You can also find this batch job in the FA Ledger Entry and the FA Register windows. Canceling incorrect FA ledger entries makes sure that the fixed asset amounts are shown correctly in statistics windows and reports.

Copy FA Entries to G/L Budget – copies entries as a batch job from the Fixed Assets to budget entries. If more information has to be included, you can select the additional fields that you want to include in the batch job on the Options tab or Fixed Asset tab.

To access the batch jobs, open the Actions FastTab in the Depreciation Book Card window, and then in the ribbon, in the Functions group, select the relevant batch job.

Fig 7: Depreciation Book Card Batch Jobs

These are the major setups carried out before posting fixed assets transaction in Microsoft Dynamics NAV.

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