Automatic Registration of Equipment as a Fixed Asset at Goods Receipt

This document describes how equipment can be automatically registered as a fixed asset at goods receipt and can be activated when matching the supplier invoice against the goods receipt without any manual registration. This procedure applies to both rental and leasing equipment.

In M3 Business Engine (M3 BE), equipment corresponds to a serialized item or a fixed asset, depending on its lifecycle.

Outcome

After reading this document, you understand the basic user workflow, the functional flow and the prerequisites for automatically registering equipment as a fixed asset.

Use this information for configuring M3 BE and for troubleshooting.

Before you start

Not applicable.

Setup

Prerequisites Comments
The division must be defined as a rental division in 'Company. Connect Division' (MNS100/K).
The equipment must be actual-costed. This means it must have inventory accounting method 4 selected in 'Item. Open' (MMS001/E).
Equipment that will be part of the rental fleet must be registered in 'Item. Open Service Supplement' (SOS001).
A fixed asset type must be selected for the applicable purchase order type in parameter 300 in 'Purchase Order Type. Open' (PPS095/G). The fixed asset type, defined in 'FA Type. Open' (FAS075), consists of a selection of predefined values applicable to a specific category of assets. The fixed asset type here serves a dual purpose: 1) It defines that the items purchased by means of this purchase order type probably will be registered as fixed assets. 2) It will be proposed by default when placing a purchase order.
A stop value percentage must be defined for the depreciation type selected for the fixed asset type in 'FA Depreciation Type. Open' (FAS050/E). The stop value indicates at what value the depreciation should be stopped. When the depreciation falls below the stop value, the depreciation stops. M3 BE uses the percentage to calculate a stop value based on the total purchase price and then automatically updates the actual stop value for the depreciation type selected for the fixed asset type in 'Fixed Asset. Connect Depreciation Types' (FAS002/E). The field is only displayed in rental divisions.
The account selected for accounting rule PP20-903 (Fictive inventory – item and charges) in 'Accounting Rule. Set' (CRS395) must be labeled as a fixed asset account in 'Accounting Identity. Open' (CRS630), whereas the accounts selected for accounting rules PP20-230 (Header charges) and PP20-905 (Fixed asset not invoiced – total) cannot be labeled as fixed asset accounts in (CRS630). PP20-903 represents the expense transactions for the invoice amount and any invoice line charges that are created at invoice matching. The account must be a fixed asset account for the preliminary fixed asset to be activated automatically at invoice matching and to assign it a correct acquisition cost.

Follow these steps

  1. Create purchase order

    You place a purchase order on a serialized item based on a purchase order type with a fixed asset type selected. The fixed asset type is defaulted to the purchase order line in 'Purchase Order. Open Line' (PPS201/F). You can change the proposed fixed asset type for a specific line or even remove it. In the latter case the item on the line would not be registered as a fixed asset.

  2. Receive equipment and create preliminary fixed asset

    When you receive the equipment in 'Purchase Order. Receive Goods' (PPS300), a preliminary asset is automatically created in 'Fixed Asset. Open' (FAS001). To create a link between the equipment and the fixed asset, the origin ID is used as the fixed asset ID and the fixed asset is automatically updated with origin ID, item number and lot number. In addition to this, the equipment is also updated with the ID of this preliminary fixed asset in 'Equipment/Serialized Item. Open' (MMS240). By selecting option 40 for the equipment in (MMS240) you can display the corresponding fixed asset in (FAS001). Also, to make it easier to identify the fixed asset based on item number, you can select sorting order 8 in (FAS001/B) to list fixed assets by item number and lot number.

    You can manually change the fixed asset type at goods receipt. You can also prevent a fixed asset from being created by simply removing the proposed fixed asset type.

  3. Account entries

    The following account entries are created at goods receipt:

    • PP10-225: Received, not invoiced – item
    • PP10-226: Received, not invoiced – charge
    • PP10-905: Fixed asset not invoiced – total.

    No account entries are created for internal charges (accounting rule PP10-251).

  4. Functional flow

    From a functional perspective, the goods receipt in (PPS300) triggers functional program MMS900. MMS900 triggers functional program FAMNGCAF to create a fixed asset by updating the fixed asset master table, FFASMA, and the table for depreciation types, FFASDM.

  5. Activate fixed asset at invoice matching

    When you match the supplier invoice to the goods receipt, either from 'Supplier Invoice. Record' (APS100) or 'Supplier Invoice. Recode' (APS110), M3 BE automatically activates the fixed asset. It is important that the invoice matching is done after the goods are received.

    M3 BE automatically sets the acquisition cost as the total of the purchase cost and any line charges added during the invoice matching. The goods receipt date is used both as the acquisition date and the activation date. If a stop value percentage for the depreciation was defined for a depreciation type connected to the fixed asset type, a stop value amount is automatically calculated based on this percentage and the total acquisition cost. M3 BE then creates a depreciation plan for each of the depreciation types connected to the fixed asset. The depreciation plan is based on a combination of values: the setup of the depreciation type, the calculated acquisition cost and the calculated stop value amount.

    Since the origin ID used as the fixed asset ID is also stored in the fixed asset master table, as displayed in (FAS001/E), you can change the fixed asset ID afterwards and still keep the connection to the origin ID.

  6. Account entries

    The following account entries are created at invoice matching:

    • AP10-200: Invoice amount
    • PP20-225: Received not invoiced – item
    • PP20-226: Received not invoiced – charge
    • PP20-230: Header charges (Note that the account cannot be a fixed asset account.)
    • PP20-903: Fictive inventory – item and charges (Note that the account must be a fixed asset account.)
    • PP20-905: Fixed asset not invoiced – total. (Note that the account cannot be a fixed asset account.)
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