1 Topic by chidydula (edited by chidydula 03/01/2020 09:25:50 am)

  • From: Tanzania, Zanzibar
  • Registered: 03/01/2020
  • Posts: 1

Topic: Fixed Asset

How can I register Fixed Asset Opening item in FA after posting Opening Balance in respect Ledger of an Asset by using Journal Entry, if the business already run for several years and decide to shifting in FA without using *Fixed Assets Purchase*. Other wise my Cash flow will be affected and it will be not reliable based in accounting Standard.

  • From: Singapore, India, Chennai
  • Registered: 05/02/2009
  • Posts: 6,160

Re: Fixed Asset

You can always make a Journal entry for all account heads from the previous years balance sheet. Alternatively, make the contra an intermediary suspense account and then allot the fixed assets as if they were purchased then.

apmuthu's Website

3 Reply by ccmacachor (edited by ccmacachor 10/04/2020 10:24:51 am)

  • From: Philippines, Calabarzon
  • Registered: 07/30/2020
  • Posts: 33

Re: Fixed Asset

Hello Apmuthu,

Pardon me for asking.

1. Does contra refer to Accumulated Depreciation? What does it mean to "allot the fixed assets as if they were purchased then?"

2. If a transferred asset still has remaining life, how is depreciation expense handled?

3. Does setup in Fixed Assets>Maintenance>Fixed Assets apply to fixed assets from previous years that are part of the beginning balance? Can I follow the first example in the Wiki, or is this something that will be covered in a future Wiki example?

4. How is salvage value handled, and where can I find a setting for this?

I have searched the forums and Wiki and cannot seem to find the clarification I am looking for. I appreciate any enlightenment on the above matters.

Thank you.

Celito

  • From: Singapore, India, Chennai
  • Registered: 05/02/2009
  • Posts: 6,160

Re: Fixed Asset

Contra is the account into which a balancing amount in a transaction goes.

For example, if  cash is given by the company to a vendor, then:
Cash Account Credit
Vendor Account Debit (Contra Account)

Salvage value is not handled in FA except if not depreciated after a certain while and a residual value is left in the asset account - book value.

When moving from other accounting systems, make the opening FA Asset Value as the existing written down book value of the asset. This is so that any fresh depreciation can commence from where the old accounting system left off.

Maybe if you have the time, after you have sufficient experience in using the FA Fixed Assets module, you are welcome to fill in the wiki at:
https://frontaccounting.com/fawiki/index.php?n=Help.FixedAssets

apmuthu's Website

  • From: Philippines, Calabarzon
  • Registered: 07/30/2020
  • Posts: 33

Re: Fixed Asset

Thank you Apmuthu for your valuable feedback and tips.

With respect to salvage value I also find it practical not to consider it in computing depreciation. It is an estimate of an amount expected to be realized in the future, and therefore subject to uncertainty and the effect of the time value of money. It's better to fully depreciate based on total cost. If the asset can be sold or exchanged for anything above zero book value in the future, the amount realized can be credited to income. It is more conservative that way.

Thanks again. This clarifies many things and I now understand the flexibility and alternative approaches that can be considered.

Celito