Repair and modernization of fixed assets

To display fixed asset repair or modernization entries, such documents as

• Fixed Asset Release Act with the Modernization, Send to Modernization and Back from Modernization types;
• FA Modernization Act are used.

These documents make it possible to carry out transactions to increase the initial cost of a fixed asset by the repair or improvement cost amount.

The salvage value of a fixed asset can be changed in the Fixed Assets Journal by selecting the Salvage Value option in the FA Posting type field.

Fixed Assets modernization/repair process

To reflect the costs associated with the repair or modernization of the Fixed Asset, such documents as the Purchase Invoice with the Fixed Asset in the lines, or the FA Modernization Act of Fixed Assets, if the goods available in the stocks of the enterprise are used. Thus, capital investments will accumulate the amount of costs for the modernization/repair of the Fixed Asset, which must be added to the original value of the Fixed Asset.

To transfer the accumulated amounts of modernization/repair of the Fixed Asset from capital investments to the Depreciation book, use the document Fixed Asset Release Act with the types Send to Modernization and Modernization/Back from Modernization.

If the modernization or repair of the Fixed Asset occurs without decommissioning, then an act with the type Modernization/Back from Modernization from modernization is used. Posting of such a document will transfer the amount accumulated on capital investments to the Depreciation book, while the status of Fixed Assets will remain as Operation.

If the Fixed Asset is decommissioned for the period of repair or modernization, then for this you need to first make posting of the Fixed Asset Release Act with the type Send to Modernization. The FA status will be changed to Modernization.

If there is a need to modernize the existing but not commissioned FA, then after posting of the FA Modernization Act, the FA status will remain unchanged with the value Inventory.

If it is necessary to cancel the modernization by posting the corrective FA Modernization Act, the system leaves the status of FA with the value that the FA had before posting of the FA Modernization Act, except for the situation when the FA was decommissioned and acquired the status of Modernization. In this case, after posting the corrective Modernization Act, the system returns the status of the Fixed Asset to the Operation status.

After the repair or modernization of the fixed asset is completed, it must be returned from modernization to operation by Fixed Asset Release Act with the type Modernization/Back from Modernization. Posting of this document will transfer the amount accumulated on capital investments to the Depreciation book and change the status of fixed assets to Operation. In the FA Ledger Entries for appropriate entry will be set Modernization like corresponding characteristic. Also, when returning the Fixed Asset from repair/modernization, it is possible to specify a new useful life and new depreciation ending date by filling in the corresponding fields in the document lines:

• New No. of Depreciation Years;
• New Depreciation Ending Date.

For these document types, there are printable forms that you can print by clicking Print.

Depreciation of Fixed Assets, during modernization or repair term

In order to comply with the requirements of the legislation on depreciation accrual to fixed assets that are under repair or modernization, it is necessary to set the settings Skip modern. period for Depr. in the Fixed Asset Setup.
With the setting enabled, depreciation accrual stops starting from the month following the month of transfer of fixed assets for repair, modernization, completion, retrofitting and starts from the month following the month in which the fixed assets became suitable for useful use. Also, depreciation of fixed assets under the new parameters, increased initial cost and new useful life (if any), will be carried out from the month following the month in which the retrofitting of fixed assets was carried out.

Using Release Act

The FA Release Act with the Modernization type reflects transactions to increase the book value of fixed assets that have already been released on the corresponding depreciation book.

To display entries with the fixed asset sent for repair, the Release Act with the Send to Modernization type is used. After posting such an Act, the status of the fixed asset will be changed to Modernization. The accrual of depreciation of fixed assets is suspended for the period of its repair, modernization or improvement.

To return a fixed asset from repair or modernization, it is necessary to post the FA Release Act document with the Back from Modernization type. The status of the fixed asset changes to Operation. See FA Release Act to learn more about filling in the fields of the Release Act document.

Using FA Modernization Act

To modernize a fixed asset with an item, the FA Modernization Act document is used.

To create an FA Modernization Act:

1. Click to open Search, enter FA Modernization Act, follow the link.
2. On the FA Modernization Act list page, click New to create a new Act.
3. On the card of the new Act, fill in the following fields:
   • FA No. should contain the number of the fixed asset being upgraded.
   • Depreciation Book Code should contain the code of the depreciation book on which the upgrade amount of the fixed asset will be reflected.
   • Location Code contains the code of the warehouse where the item used for fixed asset modernization is located,
   • Gen. Bus. Posting Group contains the code of the general business group for which this transaction is carried out,
   • Posting Date and Document Date.
4. In the lines of the Act, it is necessary to indicate the Item No. of the item used for fixed asset modernization, Quantity of the item, FA No. with the number of the fixed asset that is being modernized and Depreciation Book Code with the code of the depreciation ledger which will reflect the fixed asset modernization amount. The FA location code field will be filled in from the Fixed Asset card and cannot be changed, if it is empty in the Fixed Asset card - the FA location in the document is filled in automatically by default with the value from the Default FA Location Code field from the Fixed Asset Setup page with the option to modify it in the line. If necessary, the Reason Code can be indicated to show the reason behind the item write-off. The Unit Cost, Unit Amount and Unit of Measurement Code fields will be filled in automatically from the item card.
5. To view or add document signatures, click Employee Signatures.
6. To post the Act, click Post, and the document will be moved to the Posted FA Modernization Acts page.

NOTE
If the status of the fixed asset, which is being modernized by the items, is blank, then the posting of the FA Modernization Act will change the status of the asset to Inventory. If, at the time of posting the FA Modernization Act, the asset already has a status, this status will not be changed after the posting.

See Also

Fixed Asset Card
Creating a Fixed Asset card
FA acquisition and distribution of additional expenses
FA Release Act
Transfer Item to FA
Internal movement of fixed assets
FA Write-off
FA Sale