Here's a common scenario for Dynamics 365 Finance users:
"Company A" has a purchase order for $1,000 in January that will be a part of a fixed asset. There will be two additional PO’s that will be part of this fixed asset, but won’t be invoiced until February and March. The asset should not be placed in service until all three invoices have been posted.
First, let’s start by reviewing the required setup: Fixed assets > setup> fixed asset parameters
- In the fixed asset parameters, “allow asset acquisition from purchasing,” should be set to "no". When this is set to "yes," a fixed asset is automatically acquired when the invoice is posted. When this is set to "no," the user will have to run an acquisition proposal to acquire fixed assets, and can manually choose to exclude those fixed assets, which should not yet be placed in service (this process will be outlined later in the blog).
- Create an asset during product receipt or invoice posting—this can be set to "yes" or "no". "Yes" will automatically create a fixed asset ID for the user. By selecting "no," a fixed asset user will need to create the fixed asset ID before it's entered onto the PO.
- Check for fixed assets creation during line entry should be set to "yes".
Inventory > posting > posting
- Inventory Posting Profile setup for Purchase Order > Purchase expenditure, un-invoiced and Purchase expenditure for expense should both be set to a Fixed Asset CIP account or an Asset clearing account:
Fixed asset > setup > fixed asset posting profile
- And then the fixed asset posting profile for acquisition will be set to the Fixed Asset account, and the Offset account should be the CIP/asset clearing account chosen above
Now that set up is complete, let’s begin the process to purchase the fixed asset through a Purchase Order (or multiple purchase orders).
Create the first Purchase Order
After selecting the proper procurement category for your fixed asset, click on the Fixed assets tab, select New fixed asset = Yes. Choose the appropriate fixed asset group.
Next, confirm the PO and then post a product receipt for this PO. Once the receipt is posted, the fixed asset ID will be created. (It's auto-created here because we selected the parameter "create asset" during product receipt or invoice posting to "yes".)
Next post the invoice for this PO. Once the invoice is posted, the fixed asset book record will have an acquisition price, but will be in a "not yet acquired" status:
- Click on the link for the Fixed Asset number from the PO fixed assets tab
- Click "books" from the ribbon at the top of the fixed asset
- Book record is crated with acquisition price, but is in status of not yet acquired:
In February, a new PO is setup that will also be part of this fixed asset. On this PO, on the fixed assets tab for the line details, "new fixed asset?" should be set to "no," and the user should choose the same fixed asset number here, that was already created from the first PO.
This PO can now be received and invoiced.
This step can be repeated as many times as necessary for the number of PO’s that will contribute to this one Fixed Asset.
Once all of the Purchase Orders have been invoiced, and the Fixed Asset is ready to be placed in service, an acquisition journal can be run for this fixed asset.
- Fixed assets > Journal entries > Fixed assets journal
- Proposal > Acquisition proposal
- A line for each invoice will be pulled into the acquisition journal
- Update the "date" to today’s date, or the date the fixed asset should be placed in service
- Post the acquisition
- Once the acquisition is posted, the fixed asset will be placed in service, and begin depreciating per depreciation rules setup on the book
Finally, let’s review the GL postings for this process:
- The purchase order receipt voucher will credit your received, not invoiced, account and debit the Fixed Asset CIP or asset clearing account you chose for purchase expenditure, un-invoiced. This way, the piece of the asset can be recorded as received, but will not yet hit the fixed asset sub-ledger.
- The purchase order invoice voucher will reverse the accrual above (2 highlighted lines below):
- And then credit accounts payable, and debit the CIP or asset clearing account again, since even though the invoice has been posted, the fixed asset is still not posted in the sub-ledger.
- Once the fixed asset acquisition journal is posted, the CIP or asset clearing account will be credited, and the fixed asset account (from the fixed asset posting profile for acquisition) will be debited, since this asset is now placed in service in the fixed asset module.