What is Asset Disposal?
Asset Disposal (FAD) can automate the procedures for disposing of a selected asset or group of assets. It generates the relevant disposal postings, and reports the postings.
You can use Asset Disposal to:
- report on assets selected for disposal.
- reverse transactions on an asset record so that the asset's net value is zero.
Disposing of an Asset
There are three stages involved in the disposal of an asset:
- You must identify the asset to be disposed of by setting the Asset Status to Ready for Disposal. You can do this manually using Asset Records (FAS), or you can change the status for a range of assets using Asset Disposal Selection (FAE).
- You should use
Ledger Entry (LEN) to manually post any sales proceeds
for the asset, if it has been sold.
Note: Do not remove the asset static data if sales proceeds are to be posted after disposal. The asset sale proceeds posting does not need to contain an Asset Marker.
- You must then use Asset Disposal to dispose of the assets by generating transactions that reduce the asset values to zero, and remove the selected asset details. If Force Journal Listing is switched on in Ledger Setup (LES), then a listing of the generated transactions is printed.
If you choose to remove asset details, note that they are still accessible in Ledger Inquiry.
Once an asset has been processed by Asset Disposal, the Disposed flag is set for the asset on Asset Records (FAS).
Determining the Disposal Period
Transactions are posted to the disposal period specified on the asset record, provided it falls within the range of periods selected in the asset disposal process. If the disposal period on the asset record is blank, then the disposal transactions generated are posted to the last period in the disposal period range. The disposal period on the asset record is also updated with this period.
What are the Disposal Postings?
The following disposal postings are generated:
- Credit the balance sheet asset account with the gross value of the asset, including any adjustments
- Debit the profit and loss account specified with the same gross value amount
- Debit the balance sheet accumulated depreciation account with the accumulated depreciation value
- Credit the profit and loss account specified in Asset Disposal with the same accumulated depreciation amount.
Sequence codes can be applied to the system generated asset disposal transactions, if required. See 'Introducing Ledger Sequence Numbering'.
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.
- If you use both Preset Analysis Codes 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 Preset Analysis Codes. This is because the Business Rules operate after the disposal process finishes setting analysis codes on the generated transactions.
- 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 asset disposal transaction report.