Assets
An Asset is any valuable Item owned by a Company.
Furniture, computers, mobile phones, printers, cars, manufacturing equipment are examples of assets. Generally, an asset is a tangible item that is located on the company premises or is carried by an employee. In some cases, an asset could be an intangible item.
An asset’s useful life spans across multiple years and hence its economic value is spread over corresponding years from the accounting perspective. If you buy a printer for $300 and it is expected to be useful for three years, from the accounting perspective $100 is recorded as the expense for three years each instead of all the $300 in the first year. Most countries have rules for such calculations.
In ERPNext, the Asset record is the heart of asset management module. All the transactions related to an Asset like purchasing, depreciation, maintenance, movement, scrapping, sales will be recorded against the Asset record.
To access the Asset list, go to: > Home > Assets > Assets > Asset
1. Prerequisites
Before creating and using Asset, it is advised to create the following first:
• Item with ‘Is Fixed Asset’ enabled.
• Asset Category
2. How to create an Asset
An Item representing the asset should be created. The ‘Maintain Stock’ should be unchecked and ‘Is Fixed Asset’ must be checked.
If you have enabled auto asset creation for the item representing an asset, you will have to provide the asset location while submitting the Purchase Receipt.
A message confirming the creation of assets is displayed on submission of Purchase Receipt.
If you would like to create assets manually, create an Item with ‘Is Fixed Asset’ enabled and leave ‘Auto Create Assets on Purchase’ unchecked . On submission of a Purchase Receipt/Purchase Invoice with that Item a message is shown indicating that you need to create assets manually.
Follow below steps to create assets manually.
1. Go to the Assets list, click on New.
2. Enter a name for the asset.
3. Select the Item Code. Item Name and Asset Category will be fetched automatically.
4. Select the Asset Owner, i.e. Company, Supplier, or Customer.
5. Select the Company/Supplier/Customer.
6. Select the Purchase Receipt/Purchase Invoice. Purchase Date and Gross Purchase Amount will be fetched automatically.
7. Select a Location. Eg: Mumbai Office. This will be fetched automatically if specified in Purchase Receipt items table
8. Set Available-for-use Date. The depreciation will be calculated starting from this date.
9. Save and Submit.
Please note you need create one asset record for each asset you have bought. If you have bought five computers and have created just one Purchase Receipt with quantity set to five then you will have to create five asset records manually.
2.3 Creating composite assets
If, for example, you want to create a “Computer” asset made from multiple different items like “Monitor”, “Keyboard”, etc., you can create a composite WIP asset by checking the is_composite_asset checkbox. Afterwards, you can tag that asset in the WIP Composite Asset field of the Item in Purchase Receipts/Invoices, and once all the items are available, you can use the Asset Capitalization feature to capitalize the asset.
When you move from a legacy system to ERPNext, you will have to add details of all the assets your company has purchased previously along with depreciation details of each asset.
For an existing asset, you can create the asset record directly by checking “Is Existing Asset” checkbox and provide below details.
• Gross Purchase Amount
• Purchase Date
• Available-for-use Date
• Opening Accumulated Depreciation: The accumulated depreciation amount which has already been booked for an existing asset.
• Number of Depreciations Booked: Number of depreciation entries already booked.
• Is Fully Depreciated: Mark this checkbox if the existing asset is fully depreciated
Based on these details the schedule for depreciation of remaining amount will be created automatically.