How to manage Fixed Assets in Microsoft 365 Business Central ?

Step by Step Guidelines on Acquiring, Depreciating, Re-evaluating, Transferring and Disposal of Fixed Assets.

Fixed asset is a long-term tangible property or equipment a company uses to operate its business. Fixed assets include buildings, computer equipment, software, furniture, land, machinery, and vehicles. Companies can depreciate the value of these assets to account for wear and tear. Fixed assets commonly appear on a company balance sheet as property, plant, and equipment (PP&E).

Managing fixed assets in Microsoft Dynamics 365 Business Central involves tracking assets throughout their lifecycle, including acquisition, depreciation, maintenance, and eventual disposal. Here’s a breakdown of the key tasks for managing fixed assets:

A. Acquire Fixed Assets

Acquiring fixed assets in Microsoft Dynamics 365 Business Central is a straightforward process. Here’s how you can do it in simple terms:

1. Set Up the Asset in the System:

• Create Fixed Asset Cards: Start by setting up fixed asset records. First, go to the Fixed Assets section in Business Central and create a new record for the asset you’re acquiring.
• You’ll give the asset a name (like “Office Computer”, “Equipment” or “Company Vehicle”) and some details like the purchase date, type of asset, and how you plan to depreciate it (this is how you account for its value going down over time e.g., straight-line method, declining balance).

2. Record the Purchase:

• If you are buying the asset from a vendor, you will go to the Purchase Invoice page.
• Create a new invoice for the vendor and, in the line items, select the asset you just set up. Enter the purchase price in the appropriate fields.
• When you are done, click Post to save the record.

Post Without an Invoice (Alternate Method):

• If you’re not using a purchase invoice, you can record the acquisition directly through the Fixed Asset G/L Journal.
• In Order to acquire the fixed asset, click on the ‘Acquire’ action on Fixed Assets Card.
• This will open a Wizard to get the Data from the User and convert into Fixed Asset G/L Journal Acquisition Entry
• Find the asset, enter the cost you paid and posting date, and click Next.
• Enter the Balancing Account for Acquisition Amount, click Next
• Finish the wizard.
• After finishing, Acquisition Entries in FA Ledger Entries will be opened.
• Check the detail, Once you’ve posted the purchase, you can go back to the asset’s details page (its card) and check the entries to see that everything, including the cost, has been recorded correctly.

B. Depreciating Fixed Assets

Assets lose value over time, so Business Central helps you automatically calculate depreciation on periodical basis.

• Set Depreciation Schedules: In the Depreciation Book section, you can set up a depreciation method (Like Straight Line, Diminishing Value) and define how often (monthly, yearly) you want to run depreciation calculations.
• Run Depreciation Calculations: Use the Calculate Depreciation batch job to update depreciation entries automatically. After the calculation, post the entries to the general ledger.

C. Revaluing or Adjusting Fixed Assets

• Sometimes an asset’s value may need to be revalued. For example, if it’s been significantly upgraded or repaired that enhance its value.This ensures the value of the asset on your books reflects its real-world condition.
  • When the value of a fixed asset increases, you post a journal line with appreciation to the depreciation book. The new amount is recorded as appreciation according to the fixed asset posting setup.
    • Go to the  icon, enter Fixed Assets G/L Journals, and then choose the related link.
    • Create an initial journal line and fill in the fields as necessary.
    • In the Fixed Assets Posting Type field, select Revaluation.
    • Choose the Insert Fixed Assets Bal Account action. A second journal line is created for the balancing account that is set up for appreciation posting.
    • Choose the Post action.
  • When the value of a fixed asset decreases, you post a journal line with a lower amount, a write-down, to the depreciation book. Again, this ensures the value of the asset on your books reflects its real-world condition.The new amount is recorded as a write-down according to the fixed asset posting setup.
    • Go to the  icon, enter Fixed Assets G/L Journals, and then choose the related link.
    • Create an initial journal line, and fill in the fields as necessary.
    • In the Fixed Assets Posting Type field, select Write-Down.
    • Choose the Insert Fixed Assets Bal Account action. A second journal line is created for the balancing account that is set up for write-down posting.
    • Choose the Post action.

D. Disposing of Fixed Assets

When an asset is no longer in use, it may be sold, scrapped, or disposed of. A disposal entry must be the last entry posted for a fixed asset. 

• Record Disposal: Use the Fixed Asset G/L Journal to record any disposal or sale. You can also use the Disposal function to automatically create entries for scrapping or selling the asset.
  • Go to the  icon, enter Fixed Asset G/L Journals, and then choose the related link.
  • Create an initial journal line and fill in the fields as necessary. Hover your mouse over a field to read a short description.
  • In the FA Posting Type field, select Disposal.
  • Choose the Insert FA Bal. Account action. A second journal line is created for the balancing account that is set up for disposal posting.
  • Choose the Post action.
• Post Gains or Losses: After disposal, you may have a gain or loss depending on the asset’s residual value. Post this to your accounts to reflect it in your financials.

E. Asset Transfers

If you need to move assets between locations or departments, you can record these transfers in Business Central.You may use the fixed asset reclassification journal to transfer, split up, and combine fixed assets. 

• Use the Fixed Asset Reclassification Journals feature to update the asset’s location while keeping track of its historical data.
  • Set up a new fixed asset. Enter the new department as a dimension.
  • Assign a fixed asset depreciation book to the new fixed asset.
  • Go to the  icon, enter Fixed Asset Reclassification Journals, and then choose the related link.
  • Create a journal line where the Fixed Assets No. field contains the original fixed asset, and the New Fixed Assets No. field contains the new fixed asset to be moved. Fill in the other fields as appropriate.
  • Choose the Reclassify action.Two lines are now created in the fixed asset G/L journal using the template and batch that you have specified on the Fixed Assets Journal Setup page for the specified depreciation book.
  • Choose the  icon, enter Fixed Assets G/L Journals, and then choose the related link.
  • On the Fixed Asset G/L Journal page, choose the Post action to post the reclassification that you performed in steps 4 and 5.

By using these tools, you can effectively manage your fixed assets, ensuring accurate financial reporting, proper asset maintenance, and efficient tracking of asset values over time in Business Central.

I hope, this article might have increased your understanding and knowledge about managing fixed assets in Microsoft dynamics 365 Business central. Please give your valuable feedback on comment box.

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Author: Syed Haseeb