Fixed assets integration

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You can integrate fixed assets with General ledger, Inventory management, Accounts receivable, and Accounts payable. You can also set up fixed assets so that it integrates with purchase orders.

General ledger

In General ledger, you typically summarize the value of all fixed assets in multiple main accounts that are required for financial reporting. However, on the Fixed assets page, you can create many fixed asset records. These records can include information such as the acquisition price, depreciation, and valuation. Each time that you post a transaction for a fixed asset, the system updates the appropriate main accounts. The main accounts for fixed assets always show the updated value of the fixed assets.

On the Fixed asset posting profiles page, you define the main accounts that fixed asset book transactions post to. You also specify the types of fixed asset transactions that post to each main account. You can create various combinations of main accounts for fixed assets, depending on the level of detail that you want for fixed assets in the general ledger. You can base main accounts on transaction types, books, and other main accounts.

Inventory management

In the inventory journal for fixed assets, enter the acquisition of fixed assets that the legal entity produces or constructs for itself. You can transfer inventory items to fixed assets either as an acquisition or as part of an acquisition.

When you acquire a fixed asset through the Inventory to Fixed Asset journal by using an inventory item with a tracking dimension such as a 'Serial number' or 'Batch number', you have two options:

• If you're capitalizing a single quantity, enter the inventory item along with its tracking dimension directly in the journal line.
• If you're acquiring multiple serial or batch numbers for the same asset, assign the serial numbers by using the Reservation function on the Inventory tab.

You can also acquire assets by using purchase orders. When purchase orders contain inventory items that are designated as fixed assets, the setting of the Allow asset acquisition from Purchasing option on the Fixed assets parameters page determines whether an acquisition is posted for the fixed asset when the invoice is posted. One purchasing line creates one fixed asset, regardless of the quantity. The effect that the acquisition of fixed assets has on inventory depends on the setup of the legal entity.

When an inventory item becomes a fixed asset acquisition through the inventory journal, a purchase order, or an acquisition proposal, a fixed asset book acquisition transaction is created. If a book acquisition includes a derived book, the derived book acquisition transaction is also created.

Posting rules that you set up on the Posting page in Inventory management control the decrease in inventory when an acquisition is posted. However, you don't always decrease inventory when you post invoices that are related to fixed assets. In some cases, the fixed assets are purchased for internal use. An example is a laptop that is purchased for the sales department. When you work with purchase orders, you can use items that are set up for both resale and internal use.

If you use specific receipt and issue accounts on item groups for fixed assets, you can use the same inventory item both for internal purchases and as stock for resale.

Set up fixed assets that are for internal use so that they have an account type of Fixed asset receipt. Use this account type to track the receipt of the fixed asset. When you post a vendor invoice, use the fixed asset receipt account if any of the following conditions is true:

• The invoice line contains an existing fixed asset for internal purposes.
• The New fixed asset? check box is selected for the product receipt line that is posted.
• The Create a new fixed asset check box is selected for the vendor invoice line.

Typically, this account is an expense account. You can set up the Fixed asset receipt account type for either an item group or an individual item by using the Purchase order tab on the Item group or Posting page.

Similarly, set up fixed assets that are for internal use so that they have an account type of Fixed asset issue. Use this account type to track the issuing of the fixed asset to the recipient. When an asset is acquired by using a purchase order, the fixed asset issue account offsets the fixed asset debit account. The asset acquisition can be posted either when you post a vendor invoice or when you post the asset acquisition in the Fixed assets journal, possibly by using an acquisition proposal. You can set up the Fixed asset issue account type for either an item group or an individual item by using the Inventory tab on the Item group or Item posting page.

Ultimately, the options for ledger integration that you specify for the item model group determine the main accounts that are used for posting. Additionally, the main accounts that are used vary, depending on whether an asset is assigned to the purchase order line. The accounts are derived from the posting profile for each item group.

Note

If an inventory reservation exists when product receipts are posted, you can't assign a fixed asset or create a fixed asset from the line.

The accounts that fixed asset transactions are posted to depend on two factors: whether the assets are purchased or constructed by the legal entity, and the transaction type of the asset.

The transaction type connects the inventory transaction to the posting profile in Fixed assets. Because the posting profile in Fixed assets defines which accounts are updated, the selection of a transaction type for a fixed asset is also, indirectly, the selection of the main accounts that the transaction is posted to. For both constructed and purchased fixed assets, the transaction type is typically Acquisition or Acquisition adjustment.

Starting in Dynamics 365 Finance version 10.0.44, the inventory‑closing recalculation automatically updates the fixed‑assets subledger for assets acquired via inventory items, generating an Acquisition adjustment transaction type and posting it to the acquisition‑adjustment account defined in the Fixed assets posting profile page.

• When you adjust a purchase order invoice that includes an inventory item that was capitalized as a fixed asset, the inventory closing recalculation creates and posts the corresponding acquisition adjustment entry to the fixed‑assets subledger. If an inventory to fixed‑assets journal records a different costs for the same item to capitalize, the inventory closing recalculation adjustment applies and posts the adjustment to the fixed assets subledger.
• If the purchase order invoice records a different acquisition cost for a fixed asset, the cost variance is automatically captured and posted to the fixed assets subledger through the inventory closing recalculation adjustment.
• If the inventory to fixed‑assets journal entry reflects a different acquisition cost for a fixed asset, the adjustment is automatically posted to the fixed assets subledger by using the inventory closing recalculation adjustment.

Starting in Dynamics 365 Finance version 10.0.46, the fixed assets acquisition proposal creates Inventory sold transactions when a fixed asset is acquired through the Fixed assets acquisition proposal journal in scenarios where the same fixed asset ID is linked to more than one inventory item.

On the Fixed assets parameters page, when the Allow asset acquisition from purchasing parameter is set to No, fixed asset acquisition doesn't occur during vendor invoice posting. Instead, the acquisition is processed through the acquisition proposal journal. In this scenario, multiple inventory items referencing the same fixed asset ID results in:

• The Inventory sold transaction being created at the time the acquisition proposal journal is posted.
• A separate sold transaction being generated for each associated inventory item.

When the Allow asset acquisition from purchasing parameter is disabled, no inventory sold transaction is created during purchasing or vendor invoice posting.

Accounts receivable

The integration of Fixed assets with Accounts receivable uses posting profiles that you set up in Fixed assets. Activate these posting profiles when you select a fixed asset, book, and fixed asset transaction type for a customer invoice before you post the customer invoice. Because fixed assets aren't part of Inventory management, you must use the Free text invoice page when you sell a fixed asset.

If the book includes a derived book, the derived book transaction is created when you post the customer invoice.

Accounts payable

Typically, you acquire fixed assets from external vendors. Use the Fixed assets parameters page to specify whether asset acquisitions are always posted when you post vendor invoices, or whether asset acquisitions can be posted only from Fixed assets. If you enable asset acquisitions to be posted from Accounts payable, fixed asset accounts are updated whenever a vendor invoice for a fixed asset acquisition is posted.

If you set up the system to post an asset acquisition when an invoice is posted, the transaction is posted according to the posting profiles that you set up in Fixed assets for the various fixed asset transaction types. The fixed asset, book, and fixed asset transaction type that you select on the Purchase order page before the vendor invoice is posted control the posting.

If the book includes a derived book, the derived book transaction is created when you post the vendor invoice.

Activate the integration for each order line on the Fixed assets tab on the Line details FastTab on the Purchase order page. You can send a purchase order for a fixed asset to the vendor. However, you update the fixed assets and main accounts only when you post the vendor invoice after the fixed asset is received. Because purchase orders can contain only inventory items, the effect that the acquisition of fixed assets has on inventory depends on the setup of the legal entity.

Charges that you add to the purchase order line represent the capitalization of costs incurred during the acquisition of a fixed asset through a purchase order. Any applicable charges are automatically allocated to the fixed asset’s main account and included in the total capitalization cost, ensuring accurate financial reporting and asset valuation. To properly capitalize these charges on the fixed asset, configure the charge setup to debit the item.

Beginning in Dynamics 365 Finance 10.0.46, the integration between purchase order and inventory preserves the text entered on a purchase order line for a fixed asset by storing it in the Information 3 field when the asset is created. If the asset is later acquired through additional purchase orders that include new text, new values are appended to the existing content in Information 3 rather than overwriting it.

Project management and accounting

You can associate a project with an asset that the project affects. You can also associate each phase, task, or subproject to a different asset. Each project record can associate with one asset. You create the association when you enter a fixed asset number in the Fixed asset number field on the Projects page. The project type must be either Internal or Cost project.

Use the Projects page to view details about assets that are associated with projects. To view the fixed asset record, on the Setup FastTab, select the asset link to open the Fixed assets page. Then select Projects > All projects to view the projects that are associated with the fixed asset.

Typically, you associate fixed assets with projects when the projects are related to work, maintenance, or improvements for the asset. When the project is completed, a write-up adjustment for the asset isn't created automatically. Therefore, if a write-up adjustment is required, you must create it manually.

To delete the association between a project and an asset, clear the Fixed asset number field on the Projects page.

You can also designate a fixed asset that you're creating or manufacturing as part of an estimate project. At the end of an estimate project, you can automatically post an asset acquisition transaction.

For more information, see Acquire assets through procurement.