What is Asset Part Disposal?

Asset Part Disposal (FAF) assists you in disposing of part of an asset, by allowing you to select the asset and specify the quantity you want to dispose of. This can be part, or all, of the current asset quantity of the selected asset. The relevant disposal postings are generated, and the transactions are listed in a report.

For example, if a company purchases 100 identical chairs, one asset might be created with asset code CH01, with a quantity of 100 and an initial value of 10,000 euros. After a year, 20 of the chairs are sold or physically disposed of, and must be taken off the books. In the asset register, this constitutes a part disposal of 20 of the original asset quantity of 100. Asset Part Disposal (FAF) is used to automatically generate the relevant postings for the part disposal, to set the asset quantity to 80 for asset CH01, and to reduce the value and accumulated depreciation amounts by 20% (as 20/100 chairs are being disposed of).

Using the Asset Quantity

In order to dispose of part of an asset, the asset must have an asset quantity posted to it using Ledger Entry (LEN). To record asset quantities in Ledger Entry (LEN), the following configuration must previously have been defined:

  • On the General tab of Ledger Setup (LES), the Use Asset Quantity check box must be checked.
  • A Ledger Entry (LEN) form that includes the Memorandum Amount must be made available using Form Designer (FRD). The Memorandum Amount is used for entering the asset quantity.
  • Non-Currency Value Post Rule on the Memo Value tab of Business Unit Setup must not be set to 0-Undefined.
  • Memo Post Rule Override in the special Journal Types Setup (Posting Overrides) form must not be set to 0-Undefined.

Disposing of Part of an Asset's Quantity

There are two stages involved in the part disposal of an asset:

  1. If part of the asset has been sold, use Ledger Entry (LEN) to manually post any sales proceeds for that part of the asset.
    Note:  You must post the proceeds of the sale prior to disposing of the part quantity of the asset.
  2. Use Asset Part Disposal (FAF) to select the asset and enter the quantity that you want to dispose of.

Once an asset has been processed by Asset Part Disposal, the Part Disposed flag and the Part Disposal Period are both set appropriately for the asset on the Asset Record (FAS).

Note:  Asset budgets are not checked or modified by part disposals. If you are using over-expenditure checking, transactions are posted during Asset Part Disposal even if budgets are exceeded.

Determining the Part Disposal Period

Transactions are posted to the part disposal period specified on the asset record, provided it falls within the range of periods selected in the asset part disposal process. If the part disposal period on the asset record is blank, then the part disposal transactions generated are posted to the last period in the entered range. The part disposal period on the asset record is then updated with this period.

What are the Part Disposal Postings?

The following postings are generated:

  • Credit the balance sheet asset account with the fraction of the asset's value that corresponds to the quantity being disposed. This transaction contains the asset code and an asset indicator of Initial.
  • Debit the profit and loss account (specified in Asset Part Disposal) with the same fraction of the asset's value
  • Debit the balance sheet accumulated depreciation account with the fraction of the accumulated depreciation that corresponds to the quantity being disposed. This transaction contains the asset code and an asset indicator of Depreciation.
  • Credit the profit and loss account (specified in Asset Part Disposal) with the same fraction of accumulated depreciation.

Asset Posting Presets

If Asset Posting Presets are being used to assign analysis codes on the asset transactions, you may need to consider how these should be changed after a part disposal. You can access Asset Posting Presets from within Asset Records (FAS), and use a different asset subcode for each portion of the asset transactions that you want to apportion to an analysis code. For more information, see 'Presetting the Asset Posting Analysis Codes'.

For example, if the Asset Posting Presets previously apportioned 20% of the asset transactions to the analysis code for a location that no longer belongs to the company, then after the part disposal, the asset subcode corresponding to that location (the 20%) should be deleted, so that the remaining asset subcodes are redistributed proportionately across the remaining location analysis codes.

Note:  If asset posting preset subcodes are being used to apportion the depreciation values across a series of analysis codes using the preset factors, the same factors are used to apportion the part disposal postings for the accumulated depreciation. See 'Presetting the Asset Posting Analysis Codes'. The analysis codes posted on the disposal transaction can be subsequently changed, if necessary, using Account Allocation.

Business Rules

In addition to presetting the analysis codes for the asset postings, you can also use Business Rules to set or validate analysis codes on the transactions generated by the disposal. To do this, create an Event Profile that checks for a Function Code of Asset Depreciation, and use a Call Point of either 00015 Populate or 00016 Validate Analysis on System Generated Transactions.

Note:  If you use both Asset Posting Presets and Business Rules for this function, the analysis codes validated and set by Business Rules are definitive, and if different, override the codes set by Asset Posting Presets. This is because the Business Rules operate after the Part Disposal process finishes setting analysis codes on the generated transactions.
Note:  If a transaction fails validation by a business rule using call points 0015 or 0016, by default the error message is not shown in the transaction report. This is because it is not included in the SunSystems sample reports; therefore, to show the details of such analysis code validation, you must add an appropriate column for this to the relevant asset disposal transaction report.