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The subsequent section will discuss the setup of fixed assets and highlight key considerations when processing assets through capitalisation and subsequent stages.
When assets are created they must be assigned to an asset group which informs how the asset is treated. These are generally split based on the type of asset it is.
The classification of an asset determines how it is treated as it depreciates in value.
Tangible assets are physical items like computer hardware and real estate.
Intangible assets are non-physical, such as software and intellectual property, including trademarks, patents, and copyrights.
Tangible assets undergo depreciation, while intangible assets are subject to amortization.
Once you have established your asset groups, each should be linked to a default account for capitalisation and subsequent depreciation or amortization.
The easiest way to check this on the account defaults screen is to line up the asset group column next to the account column to make sure all assets have the required defaults in place.
Upon reviewing the example provided, it is evident that several asset groups, including motor vehicles and machinery, have been configured for depreciation but not for capitalisation. To enable capitalisation for the assets within these groups, appropriate setup is required.
For an account to be available for selection as a fixed asset account default the fixed assets setting is required to be ticked along with capitalisation. Where it is only ticked for fixed assets it can only be used as an account default.
And then when setting up as an account default the below settings should be in place as a minimum.
Please be aware the account default will pick up any asset group which has not been assigned to an account default.
Another requirement before processing the capitalisation of assets is to set up a capitalisation rule.
Below is an example rule with the minimum required for capitalisation.
The remaining fields can be filled out to direct specific capitalisation towards an asset in a preferred manner, should the requirements necessitate it.
Before proceeding with capitalisation and depreciation, ensure that the necessary documents are unlocked and a document series is assigned. The document series should be dated prior to the earliest asset to prevent posting errors.
Once the prerequisites are met, assets can be created in three ways: manually, by importing them on the assets screen, or through a purchase invoice where the account is marked for capitalisation in conjunction with fixed assets in the chart of account settings.
When you have an asset in the chart of account rules, utilising the account on an invoice allows for asset posting to link an existing asset to a new invoice. It's not necessary to populate this field if the asset isn't already present in iplicit.
For the conversion of assets from purchase invoice documents, it is necessary to have the auto capitalisation automation set up as shown below.
Even if it is not set up at the time, it can be run manually afterwards to collect any necessary assets. For assets to be automatically capitalised, the auto-capitalisation setting on the capitalisation rule must be enabled.
When an asset is created from the purchase invoice without being fully auto capitalised, it will appear on the asset capitalisation screen based on the asset capitalisation rule in place.
From here the asset can be either capitalised or excluded depending on the required needs.
Clicking 'Capitalise' makes it possible to create the asset. The available field details can be modified if necessary. This action does not capitalise the asset, as it is not yet created; it merely makes the details from the purchase invoice available for creation.
If an asset is excluded, it can be reverted back if done in error by going to the excluded tab and clicking include.
You can assign an asset number manually or one will be auto assigned if not populated.
The depreciation method may be modified provided it has not been predetermined by the asset group settings.
It is important to note that if the depreciation duration is unspecified, as in the example below, a useful life must be entered.
Without a designated useful life, the asset will not undergo depreciation, as the system cannot generate a depreciation schedule.
As mentioned previously there are other ways to create assets, which can be done from the assets screen.
Either click new to manually create an asset or click the 3 dots to get an export file and import that file once the details are entered.
Bulk asset updates can be done if the assets that need updating are in draft by importing against the existing records using the function highlighted below.
One of the common things that can happen with assets is they get stuck in a ‘pending’ status.
Often this is down to a couple of factors, usually the dates for the assets are not sensible for processing.
For example below is an asset that shows with a purchase date of 01/04/24 but is stuck in pending.
The reason for this is the associated capitalisation rule is dated 01/06/24 so it is not fully processing the capitalisation movement.
The recommendation here would be to amend the capitalisation rule to an earlier date. This should be prior to the date of the oldest asset to be capitalised using the rule.
As previously mentioned where the depreciation length is not specified a number of years needs to be entered. The asset will not capitalise where a useful life is not entered and also get stuck in pending.
The above can be identified by checking the event log. This screen is often very useful in determining what error has occurred when things do not happen as expected.
Consider this screen anytime an error occurs and you do not know what has caused it not just in this scenario.
To resolve this, go to the movements tab and click into the movement created.
Then you should abandon the asset movement and this will take the asset back to the approved state.
Then click amend on the asset to update the useful life
If assets are cleared by vanilla reset or manually, please be aware asset movements use a deferent numbering sequence that can be found on the ‘series’ screen, shown below.
This may need to be reset if the below error comes up when attempting to capitalise
When attempting to capitalise the below error on the reversing account may come up. This occurs where the account stated is catagorised as P&L rather than Balance Sheet.
Once all of the above is in place an asset can be capitalised successfully.
After this an assets depreciation can be processed. This is run through the depreciation automation either by going to the relevant automation screen or via the scheduler set up for this to run monthly.
Please be aware that when running the depreciation that the date from should be set earlier if you want to capture movements for a period prior to the date pre-populated
With the filters available it is possible to do bulk or singular depreciations
When any any asset related journal is created, it can be found on the ‘asset journals’ screen. If submit was not ticked when running the associated automation, then journals can be submitted from this screen.
You cannot edit these journals in draft and the only option currently available after posting is to amend posting attributes. These journals cannot be individually unposted.
Once the depreciation journals are posted you can also see them on the depreciation book detail screen found on the asset. The depreciation value will also update.
If errors occur during the capitalisation/depreciation of an asset, such as an incorrect depreciation start date or amount, an 'Uncapitalise' button is available. This button reverses all prior transactions and journal entries, reverting the asset to its draft state.
Once an asset is capitalised there are other options for the asset aside from depreciation/amortisation.
Each of these will also need required documents to be unlocked, series assigned and automation set up.
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