Fixed Assets Management in ERPNext

Fixed Assets are part of Balance sheet on which Depreciation has to be charged every year. In ERPNext, Fixed Assets module handles all the relevant financial accounting including Capitalizing the item on receipt and Installation & subsequent Depreciation process.

An Asset item being procured should have item master created in DMS with check box ‘Is Fixed Asset’ enabled and item group as ‘AS : Fixed Asset’. The numbering series will be AS#####. This item can also be created with item category to have attributes defined.

Fixed asset item creation will also need Asset Category to be provided. Asset category will define the Depreciation method (viz. Straight line, Written Down Value), frequency of depreciation, period of depreciation. It also configures the GL accounts to be used for Asset and depreciation.

If an Asset creation and bringing it to operation has got long gestation period, you can enable Capital Work in Progress Accounting in such Asset category. This requirement normally will be required when an Asset is being built.

Create the Item in Item DMS by selecting item group ‘AS : Fixed Asset’ and appropriate Asset Category. If required Asset category is not available, the same has to be created in consultation with Finance.  

Transfer the item to Production.  Enable ‘Auto Create Assets on Purchase’ check box.

Material Request has to be created for the Asset Item with the cost center for which asset is being procured. If required for multiple cost centers, create in separate lines of required quantity and cost center.

Make Purchase Order for the Material Request with all costs involved including Installation and commissioning if any. Any subsequent costs incurred can also be charged to the item through Landed cost Voucher.

 On receipt of item through Purchase Receipt transaction, Assets get created for each of the quantity with unique Asset number. Asset created document has to be submitted after successful completion of installation in order to trigger the Asset accounting and depreciation.