Additions to Assets: To Make an Addition by Converting a Purchase

The following activity will walk you through the process of making an addition to a fixed asset. You will make this addition by converting a purchase.

Story

Suppose that the accountant of SweetLife Fruits & Jams recognized that Frontsource Ltd. used materials for roof repair in the amount of $4,700. A portion of this amount, $2,200, was reconciled earlier. The accountant has decided to process the rest of this amount as an addition to the existing roof repair asset in order to depreciate this cost. Acting as the SweetLife accountant, you need to make this addition to the existing fixed asset.

Configuration Overview

In the U100 dataset, the following tasks have been performed for the purposes of this activity:

  • On the Enable/Disable Features (CS100000) form, the Fixed Asset Management feature has been enabled.
  • On the Chart of Accounts (GL202500) form, the needed GL accounts have been created.
  • On the Fixed Assets Preferences (FA101000) form (Posting Settings section), the Automatically Release Acquisition Transactions check box has been selected.

Process Overview

In this activity, on the Convert Purchases to Assets (FA504500) form, you will convert a purchasing transaction to an addition to an existing fixed asset. On the Fixed Assets (FA303000) form, you will review the updated cost of the fixed asset. Then you will review the generated GL transaction on the Journal Transactions (GL301000) form.

System Preparation

Before you begin making an addition to a fixed asset by converting a purchase, do the following:

  1. Launch the MYOB Acumatica website with the U100 dataset preloaded, and sign in as an accountant by using the johnson username and the 123 password.
  2. In the info area, in the upper-right corner of the top pane of the MYOB Acumatica screen, click the Business Date menu button, and select 3/12/2024 on the calendar.
  3. In the company to which you are signed in, be sure that you have implemented the fixed asset functionality by performing the following prerequisite activities: Fixed Assets: To Configure the System for Fixed Asset Management, Fixed Assets: To Configure the Fixed Asset Functionality, and Fixed Assets: To Create Fixed Asset Classes.
  4. Make sure that you have entered the purchasing transaction for repair work by performing Non-Default Asset Settings: Process Activity, which is also a prerequisite activity.
  5. On the Company and Branch Selection menu on the top pane of the MYOB Acumatica screen, select the SweetLife Head Office and Wholesale Center branch.

Step 1: Converting a Purchase to an Addition to a Fixed Asset

To make an addition to an existing fixed asset, do the following:

  1. Open the Convert Purchases to Assets (FA504500) form.
  2. In the Account box of the Selection area, select 62950 (Repairs).
  3. In the upper table, select the unlabeled check box in the row with the original amount of $6,750 posted to the 62950 account. (See the following screenshot.) The open amount of this entry is currently $4,550.
  4. In the lower table (which provides a list of units of the item selected for conversion in the upper table), click Add Row on the table toolbar, and clear the Create Asset check box in the added row, because you are going to make an addition to an existing asset.
  5. In the Asset ID column of the added row, select the Roof repair (Head Office building) asset, and specify 2500 ($4,700 – $2,200) in the Transaction Amount column (also shown in the following screenshot).

    The system automatically inserts ADMIN in the Department column and BUILDING in the Asset Class column, because these are the settings of the fixed asset that you selected in the upper table.

    Figure 1. Addition to the existing roof repair asset


  6. In the Transaction Description column of this row, type Additional materials used.
  7. Click Process on the form toolbar to add the cost of these materials to the asset.

Step 2: Reviewing the Updated Fixed Asset

To review the Roof repair (Head Office building) asset, which has been updated with an addition, do the following:

  1. On the Fixed Assets (FA303000) form, open the Roof repair (Head Office building) asset.
  2. Go to the Balance tab. Notice that the current cost of the fixed asset has been increased by the amount of the addition and is now $10,500 ($8,000 + $2,500), while the Orig. Acquisition Cost remains unchanged.
  3. On the Transactions tab, review the transactions that were generated when the addition was processed, as shown in the following screenshot.
    Figure 2. Generated transactions


  4. Click the link in the Batch Number column, and review the generated batch on the Journal Transactions (GL301000) form.

    The system has created and released the following transactions:

    • A Purchasing+ transaction that updates the current cost and the basis of the asset, and generates a GL transaction that debits the Fixed Assets account (15200) and credits the FA Accrual account (15010).
    • A Reconciliation+ transaction that updates the unreconciled amount of the asset, debits the FA Accrual account (15010), and credits the GL account that was used in the AP bill (62950). The transaction also decreases the open amount of the reconciled GL entry to avoid converting the same amount to a fixed asset multiple times.