Purchasing an Asset
For purchasing a new asset:
1. Create an Asset Category
2. Create a related Item with ‘Is Fixed Asset’ enabled for creating the asset.
3. You may also enable ‘Auto Create Assets on Purchase’ for creating assets automatically. (Optional)
4. Then, the purchase cycle should be followed for purchasing an asset.
5. Enter the Asset Location in the Items table of the Purchase Receipt or Purchase Invoice through which you are receiving the item.
6. On submission of a Purchase Receipt, based on auto creation checkbox, Asset records will be created automatically. You can then enter other details of the Asset manually from the Asset form.
Following accounting entries will be posted on submission of the Receipt entry if Capital Work In Progress Accounting is enabled in the Asset Category of the purchased asset.
It is noticeable here that, instead of corresponding asset account, Capital Work in Progress (CWIP) has been debited. This is because the asset has only been purchased and it is still not available for use. Until the asset is available for use, the asset value is maintained against this account. On the day when it is available for use, the CWIP account gets credited and corresponding asset account gets debited.
In case of disabled ‘Capital Work In Progress Accounting’ in the Asset Category, the receipt entry will be made against corresponding asset accounts set in the Asset Category.
ERPNext also uses a temporary account “Asset Received But Not Billed” (a liability account) which gets credited on submission of Purchase Receipt entry. Later, on submission of Purchase Invoice, this account gets debited/reversed.
Selling an Asset
To sell an asset, open the asset record and clicking on the Sell Asset button. This will take you to a Sales Invoice. In the Sales Invoice, enter details like Customer and Payment Due Date.
On submission of the Sales Invoice, following accounting entries will take place:
• “Receivable Account” (Debtors) will be debited by the sales amount.
• “Fixed Asset Account” will be credited by the purchase amount of asset.
• “Accumulated Depreciation Account” will be debited by the total depreciated amount till now.
•“Gain/Loss Account on Asset Disposal” will be credited/debited based on gain/loss amount. The Gain/Loss account can be set in Company record.
Asset Movement
The Asset Movement feature lets you do the following:
• Move an asset from one location to another location (Transfer)
• Move an asset from one location to an employee (Issue)
• Move an asset from one employee to another employee (Issue)
• Move an asset from an employee to a location (Receipt)
To access the Asset Movement list, go to:
Home > Assets > Assets > Asset Movement
How to create an Asset Movement
1. Go to the Asset Movement list, click on New.
2. Select the Purpose from Transfer, Issue or Receipt. Mandatory fields will be changed based on purpose.
3. Select a date.
4. Select Assets you want to move. Current Location / Custodian will be automatically fetched.
5. Select Reference Document Type (Optional).
6. Select Reference Document Name (Optional).
7. Save.
8. Submit.
To make an Asset Movement of a number of assets, it is advised to go to Asset List, select assets to be moved and click on Make Asset Movement from Actions menu on the top right.
There is also a Transfer Asset option in the Manage dropdown on the top right of the Asset form to initiate Asset Movement. It auto fills available fields from Asset Form.
