Cash Discount Solution for Fixed Assets

This document describes the cash discount solution implemented for fixed assets, through which cash discount can be automatically deducted from the acquisition cost of a fixed asset. The cash discount deduction is updated during payment of the supplier invoice, to which a fixed asset is connected. This deduction is a legal requirement in some countries.

Overview

The cash discount solution for fixed assets supports supplier payments made in 'Suppl Payment. Enter Manual' (APS120), 'Suppl Payment Proposal. Open' (APS130), 'Bank Statement. Open' (ABS100), and 'Journal Entry Payment. Open' (GLS110).

The number of the preliminary or activated fixed asset is used as a link between the posting on an F/A account in the general ledger and the fixed asset in the Fixed Assets module (FAS). The number is stored as additional information 016 (for preliminary fixed assets) or 017 (for activated fixed assets) in the table FGLEDX. This information is central also in finding the correct fixed asset(s) to be updated with cash discount, upon payment of a supplier invoice posted on an F/A account.

When a payment of a supplier invoice connected to a fixed asset is made with cash discount, the accounting string for the cash discount transaction is retrieved from the value type used for total acquisition cost for the fixed asset in the table FFAHIS. If there are more than one transaction for the value type used for acquisition cost for the fixed asset, then the accounting string for the latest transaction in the table FFAHIS is used.

Limitations

The functionality for cash discount deduction for fixed assets must be activated before cash discount can be automatically deducted from the acquisition cost of fixed assets.

See Before you start.

Cash discount is only deducted from the fixed asset values for fixed assets in status 1-'Normal FA' or 5-'Preliminary'. Fixed assets in status 8-'Fully depreciated FA', or 9-'Sold or disposed fixed asset', are not updated when the supplier invoice is paid with cash discount.

The fixed asset must be updated with cash discount before it is split or divided, for the cash discount to be divided between the new fixed assets (created through split or divide). If the fixed asset is split or divided before the supplier payment is made, the new fixed assets will not be updated when the supplier invoice is paid with cash discount.

Outcome

If the functionality for cash discount deduction for fixed assets has been activated, the following updates are made when a supplier invoice, connected to a fixed asset, is paid with cash discount.

The accounting string for the cash discount posting on the supplier payment voucher is retrieved from the accounting string for the value type used for total acquisition cost (VATT) for the fixed asset in the table FFAHIS. This is applicable when the supplier invoice has been posted on an F/A account of type 1, or on an F/A account of type 2, if the fixed asset has already been activated in 'Fixed Asset. Activate under Construction' (FAS160). If there are more than one transaction for the value type used for acquisition cost for the fixed asset, then the accounting string is retrieved from the latest transaction in the table FFAHIS.
  • The value type used for cash discount (VAT6) has been updated with the cash discount value in the tables FFASVL and FFAHIS.
  • The value type used for total acquisition cost (VATT) has been reduced by the cash discount value in the tables FFASVL and FFAHIS.
  • Program FAS011CL has been called to recalculate the depreciation plan for the fixed asset, based on the reduced acquisition cost. The new depreciation plan has been updated in the tables FFASVL and FFAHIS.
  • The text block for the fixed asset has been updated with information about the cash discount in the tables FSYTXH and FSYTXL. The update contains information about previous acquisition amount, updated amount, new acquisition amount, the voucher number for the update, the accounting date and the short description of the fixed asset.

For fixed asset under construction transactions that have not yet been activated against a fixed asset in (FAS160), the accounting string for the cash discount posting on the supplier payment voucher is retrieved from the supplier invoice. When the activation is made in (FAS160), the value type used for total acquisition cost (VATT) is updated with the net amount (after reduction for cash discount) in the tables FFASVL and FFAHIS, and the depreciation plan is based on this reduced acquisition value.

Before you start

The setup described below must be made to activate the functionality for cash discount deduction for fixed assets.

See Settings for fixed asset accounts, Settings for fixed asset acquisition, and Settings for the FAM function.

Settings for fixed asset accounts

The account used for posting of fixed asset acquisition cost must be defined as a fixed asset account in 'Accounting Identity. Open' (CRS630). This is done by setting the 'F/A account' (AT08) parameter to value 1 or 2 on (CRS630/E). This parameter indicates whether the account is a fixed asset account, and has these alternatives:
  • 0-'No'
  • 1-'Fixed assets'
  • 2-'Fixed asset under construction'

Basic information about the fixed asset can be entered directly in 'Fixed Asset. Open Preliminary' (FAS180), when posting a transaction on an account defined as an F/A account of type 1, for example during entry of a supplier invoice in 'Supplier Invoice. Record' (APS100). Thereby, a preliminary fixed asset in status 5-'Preliminary' is created in 'Fixed Asset. Open' (FAS001).

A posting on an account defined as an F/A account of type 2, will not call (FAS180). Instead, this type of account is used for entry of project costs related to a fixed asset under construction. For such a transaction, a project ID must be entered in the accounting dimension defined for projects in 'Settings – Activating FA under Constr' (FAS940). Later, the postings for this project, and for this fixed asset under construction account, are activated against a fixed asset in 'Fixed Asset. Activate under Construction' (FAS160). Thereby, the total value of those postings will be recoded to an account defined as an F/A account of type 1, and this value will update a fixed asset in status 1-'Normal FA' in (FAS001).

Transactions in the general ledger that are posted on an account defined as an F/A account of type 1, hold information about the fixed asset number in additional information number 016='Prel fixed asset no' (for fixed assets in status 5 in (FAS001)), or 017='Def fixed asset no' (for fixed assets in status 1 in (FAS001)). This additional information is stored in the table FGLEDX, and can be displayed for a transaction in 'General Ledger. Display Additional Info' (GLS212).

Transactions in the general ledger that are posted on an account defined as an F/A account of type 2, are also updated with additional information number 017='Def fixed asset no', when the transaction has been activated against a fixed asset in (FAS160).

Settings for fixed asset acquisition

The 'Csh disc deduct' (ACDR) parameter in 'Settings – Fixed Asset Acquisition' (FAS900), allows companies to decide whether cash discount should be automatically deducted from the acquisition cost of a fixed asset in FAS, when the supplier invoice is paid with cash discount. If this functionality has been activated, a value type to be used for cash discount must also be defined in (FAS900).

These alternatives are available for the 'Csh disc deduct' parameter:
  • 0-'No cash discount deduction'
  • 1-'Cash discount deducted if same year'
  • 2-'Cash discount deducted regardless of yr'
This will be the result of the different cash discount parameter selections:
  • If alternative 0 is selected, cash discount is not deducted from the acquisition cost of a fixed asset, even if the paid supplier invoice would be connected to a fixed asset.
  • If alternative 1 is selected, cash discount is deducted from the acquisition cost of the fixed asset if the payment is made during the acquisition year of the fixed asset.
  • If alternative 2 is selected, cash discount is deducted from the acquisition cost of the fixed asset regardless of whether the payment is made during the acquisition year of the fixed asset or not.
  • If cash discount deduction is not selected, or if the prerequisites are not met, cash discount is posted on accounting type 340 instead of using the accounting string from the value type used for acquisition cost for the fixed asset, and no updates are made of the fixed asset values. This would, for example, be the case if the supplier invoice is posted on an account that has not been defined as an F/A account, or if the supplier invoice posting is connected to a fixed asset that is in status 8-'Fully depreciated FA' or 9-'Sold or disposed fixed asset'. It would also be the case if the cash deduction parameter in (FAS900) has been set to 1, and the payment is made in a different year than the acquisition year of the fixed asset.

Example:

A supplier invoice is posted with 10.000 SEK on account 1210 (which has been defined as an F/A account of type 1 in (CRS630)) on the 22nd of December 2018. A preliminary fixed asset with acquisition year 2018 is created via (FAS180) with acquisition cost equal to 10.000 SEK. On the 2nd of January 2019, the supplier invoice is paid via (APS120) with 5% cash discount, equal to 500 SEK, which means that we only pay 9.500 SEK for the fixed asset.

If the 'Csh disc deduct' parameter has been set to 0 in (FAS900), the cash discount transaction for 500 SEK on the payment voucher is posted on accounting rule AP20-340, and the fixed asset values are not updated. The acquisition cost is still 10.000 SEK for the fixed asset in FAS.

If the 'Csh disc deduct' parameter has been set to 1 in (FAS900), the cash discount transaction for 500 SEK on the payment voucher is posted on accounting rule AP20-340, and the fixed asset values are not updated, as payment is made in a different year (2019) than the acquisition year of the fixed asset (2018). The acquisition cost is still 10.000 SEK for the fixed asset in FAS.

If the 'Csh disc deduct' parameter has been set to 2 in (FAS900), the cash discount transaction for 500 SEK on the payment voucher is posted on account 1210 (retrieved from the value type used for acquisition cost in the table FFAHIS), and the fixed asset values are updated. The acquisition cost is reduced by 500 SEK to 9.500 SEK for the fixed asset in FAS.

Note: If accounting type 340 is used for the cash discount posting, and the accounting rule has been defined with an equal sign (=) for accounting dimension 1 (account) on 'Accounting Rule. Set' (CRS395/E), the account will be retrieved from the supplier invoice. Consequently, if the supplier invoice has been posted on an F/A account, then the cash discount posting (for accounting type 340) will also be posted on that F/A account during payment. This would lead to a mismatch between the value for this F/A account in the general ledger, compared to the value for this F/A account in FAS, because no cash discount has been deducted from the fixed asset values in FAS in this situation.

Settings for the FAM function

The FAM functions used for supplier payments (AP20, AP32 etcetera) must be defined with the 'VAT mt cash dis' (CDME) parameter set to 3-'VAT calculated automatically' on 'FAM function. Open Details' (CRS406/E) to get cash discount correctly handled for fixed assets.

If more than one fixed asset is to be updated through the same payment voucher, parameter 'Split pmt trans' (SPAR) must be set to 2='Split GL but 1 pmt trans in AP/AR' or 3='Split GL – sev pmt trans in AP/AR' on (CRS406/E). Thereby, one cash discount transaction will be created on the F/A account for each fixed asset, and each transaction in the general ledger will be connected to the correct fixed asset via additional information 016 or 017 in the table FGLEDX.

Note: The solution for cash discount for fixed assets covers the situation where more than one fixed asset is involved in the supplier payment. An example is when the supplier invoice holds more than one posting on an F/A account, and thus all the connected fixed assets need to be updated with cash discount when the supplier invoice is paid. Another example is when several supplier invoices with connected fixed assets are paid within the same payment voucher, and thus all the connected fixed assets need to be updated with cash discount when the supplier invoices are paid. The solution also covers the situation where cash discount is withdrawn for more than one invoice connected to the same fixed asset, where the invoice amounts are updated as purchase value, and additional cost, respectively, for the fixed asset.

Follow these steps for supplier invoices posted on an F/A account of type 1:

  1. Enter a supplier invoice in, for example, (APS100), and post the invoice as a normal fixed asset on an F/A account of type 1. Enter the basic details for the fixed asset in (FAS180), and take note of the fixed asset number.
  2. Pay the supplier invoice with cash discount, in, for example, (APS120) or (APS130), and check the result. The cash discount transaction is posted on the fixed asset account and holds information about the fixed asset number in additional information 016, or 017, in the table FGLEDX.
  3. Activate the fixed asset in (FAS001), if not already activated before payment of the supplier invoice, and check the values for the fixed asset in 'Fixed Asset. Connect Value Types' (FAS003).
    • The value type used for cash discount has been updated with the cash discount value.
    • A negative transaction has updated the value type used for total acquisition cost, reducing its value by the cash discount.
    • The depreciation plan is now based on the reduced acquisition value.
    • The text block, reached by pressing F6='Text' in (FAS003), has been updated with information about the cash discount deduction.

Follow these steps for supplier invoices posted on an F/A account of type 2:

  1. Enter a supplier invoice in, for example, (APS100), and post the invoice on a fixed asset under construction account, defined as an F/A account of type 2, and on the project that it concerns.
  2. For payments before activation in (FAS160), go to 3). For payments after activation in (FAS160), go to 4).
  3. Payments before activation in (FAS160):
    • Pay the supplier invoice with cash discount, in, for example, (APS120) or (APS130), and check the result. The cash discount transaction is posted on the fixed asset under construction account.
    • Activate the fixed asset in (FAS160), and make sure that both the invoice transaction and the cash discount transaction are included in the activation. This means that the net amount, after reduction for cash discount, will be activated against the fixed asset.
    • Check the postings in the general ledger, to make sure that they are updated with information about the fixed asset number in additional information 017 in the table FGLEDX. This is applicable to the posting created on the F/A account of type 1 during activation in (FAS160), as well as to the original transactions (the invoice transaction, and the cash discount transaction) posted on the fixed asset under construction account (F/A account of type 2).
    • Check the values for the fixed asset in (FAS003).
      • The value type used for cash discount does not hold any value.
      • The value type used for total acquisition cost has been updated with the net amount (after reduction for cash discount).
      • The depreciation plan is based on the net amount (after reduction for cash discount).
      • The text block, reached by pressing F6='Text' in (FAS003) has been updated with information about the activated net amount.
  4. Payments after activation in (FAS160):
    • Activate the fixed asset in (FAS160). The posting created on the F/A account of type 1 during activation in (FAS160), as well as the original invoice transaction posted on the fixed asset under construction account ('F/A account of type 2), both hold information about the fixed asset number in additional information 017 in the table FGLEDX.
    • Pay the supplier invoice with cash discount, in, for example, (APS120) or (APS130), and check the result. The cash discount transaction is posted on the F/A account of type 1, under which the fixed asset has been activated. After payment, the cash discount posting also holds information about the fixed asset number in additional information 017 in the FGLEDX table.
    • Check the values for the fixed asset in (FAS003).
      • The value type used for cash discount has been updated with the cash discount value.
      • A negative transaction has updated the value type used for total acquisition cost, reducing its value by cash discount.
      • The depreciation plan is now based on the reduced acquisition value.
      • The text block, reached by pressing F6='Text' in (FAS003) has been updated with information about the activated amount, as well as about the cash discount deduction.
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