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Transfers, Impairments and Disposals

After an asset is registered, its life is a series of events: it moves, it is impaired or revalued, it is held for sale, and finally it is disposed of or written off. Each event is a button on the asset's card, is recorded in its History, and posts its own journal where the ledger needs one.

Where to find it

Architect Panel → ERP - Operations:

  • Asset Register — the console: Transfer, Impair, Revalue, Hold for sale, Dispose and Write off on each asset's card

Architect Panel → ERP - Finance:

  • Intercompany Rules — the due-to and due-from accounts a transfer between companies posts through

Admin Panel → Fixed Assets:

  • Fixed Assets — the same console

Before you start

These events need ERP: Fixed Assets. Impairing, revaluing and disposing need post access to the company. Set the class's Impairment Account, Revaluation Reserve Account, Gain / Loss on Disposal Account and Disposal Proceeds Account on the Books & classes tab. Repost any unposted depreciation first: each event is refused while the asset has unposted charges.

Transfer

Click Transfer, choose the Company, Transfer date, Location, Custodian and Reason, then click Transfer.

  • Within the company: the location and custodian change. Nothing posts.
  • To another company: the asset leaves at net book value through the intercompany accounts, with a journal in each company. The sending company credits cost and debits accumulated depreciation and due-from; the receiving company debits cost and credits accumulated depreciation and due-to.

Impair and revalue

  • Impair: enter the Impairment amount (at most the net book value), Date and Reason. It posts Dr impairment / Cr accumulated depreciation and marks the asset Impaired. Depreciation continues over the remaining life on the lower value.
  • Revalue: enter the Fair value, Date and Reason. Accumulated depreciation is eliminated and the cost restated to the fair value. A surplus goes to the revaluation reserve; a deficit first reverses this asset's reserve and then goes to the impairment account. An impaired asset returns to In use.

Both act on the asset's own book only.

Hold for sale

Hold for sale stops depreciation until the asset is disposed of or returned with Return to use. No journal is posted.

Dispose or write off

  1. Click Dispose (or Write off for no proceeds).
  2. Enter the Proceeds, the Proceeds account (the bank or receivable debited; blank uses the class's), the Disposal date and a Narrative. The form shows the gain or loss as you type.
  3. Click Dispose. This cannot be undone.

The disposal month's depreciation is charged first, under the class's disposal-month convention (which, unless set, is no charge in that month). Then one journal removes cost and accumulated depreciation, debits the proceeds, and posts the difference to the gain or loss account. The asset becomes Disposed or Written off and is never depreciated again.

What goes wrong

  • "This asset has unposted depreciation charges. Repost them …": repost on the Depreciation run tab first.
  • "There is no intercompany rule from A to B with due-to and due-from accounts.": add one under Intercompany Rules (see General Ledger).
  • "An impairment cannot exceed the net book value".
  • "X has N months before the disposal that were never depreciated …": run depreciation with catch-up first, so the gain or loss is right.
  • "Depreciation is already charged up to YYYY-MM … Date the disposal in YYYY-MM or later."
  • "X cannot be derecognised in the ledger: set …": the listed accounts are missing.

Worked example

A laptop bought for 1,800, three-year straight line, is sold to an employee for 300 in month 26. Its net book value before the month's charge is 550. Finance clicks Dispose, enters 300 to the bank account, and the form shows a loss. Its class's Month of disposal convention is Full month, so on posting the disposal month's charge of 50 is taken first, bringing net book value to 500, so the journal removes cost of 1,800 and accumulated depreciation of 1,300, debits 300 to the bank and 200 to loss on disposal.

Recommendations

  • Record moves as transfers, never by editing the location.
  • Set up intercompany rules before moving assets between companies.
  • Run depreciation up to date before a disposal.
  • Dispose, never delete: the history is what the year-end accounts need.