If the value of an Asset changed suddenly due to any damages, it can be recorded using Asset Value Adjustment.

In case of fixed asset management, sometimes the value of an asset needs some adjustment. For example, if a laptop gets damaged for some reason, and its value will be dropped instantly. And in that case, we have to readjust the value of the asset.

To access the Asset Value Adjustment, go to:

Home > Assets > Maintenance > Asset Value Adjustment

1. Prerequisites 

Before creating and using Asset Value Adjustment, it is advised to create the following first:

1. Asset
2. Enable ‘Calculate Depreciation’ in the Asset form

2. How to create an Asset Value Adjustment 

1. Go to the Asset Value Adjustment list, click on New.
2. Select an Asset whose value is to be adjusted.
3. Select a date.
4. Enter the current and new value of the asset.
5. Save and Submit.

On saving the system will book a “Gain/Loss on asset revaluation” and adjust the valuation of the asset. You can change the cost center and add a finance book.

On submitting, a Journal Entry is created under the ‘Accumulated Depreciations’ account.

An Asset Category classifies different assets of a Company.

The first step towards asset management is creating an Asset Category based on the type of assets. For example, all your desktops and laptops can be part of an Asset Category named “Electronic Equipments”.

In Asset Category, you can set default a depreciation method, periodicity and depreciation related accounts, which will apply to all the assets under the category.

Note: You can also set default depreciation-related Accounts and Cost Centers in Company master.

To access the Asset Category list, go to:

Home > Asset > Assets > Asset Category

1. How to create an Asset Category 

1. Enter a name for the Asset Category.
2. Check ‘Enable Capital Work in Progress Accounting’ if you want to maintain records of assets under a temporary balance sheet account instead of the corresponding asset account.
3. Save.

1.1 Additional options when creating an Asset Category 

1. Enable Capital Work in Progress Accounting: On enabling this, accounting entry for assets under this category which are not in use are posted in the Capital Work in Progress accounts. This happens when you own the Asset but it isn’t being used yet, i.e. ‘Available for Use Date’ is set at a later date. If you use all your assets immediately, disable this feature. On disabling this, CWIP accounting will be skipped.

2. Features 

2.1 Finance Book details 

You can link a Finance Book if you report depreciation in different ways. You can enter the following fields:

• Depreciation Method: Choose a depreciated method on which you’ll record the depreciation of assets in this category.
• Frequency of Depreciation (Months): The number of months within which the depreciation will be booked. The asset may be scrapped after this period.
• Total Number of Depreciations: The number of deprecations to be booked in the selected time frame.
• Rate of Depreciation: The rate of deprecation applied over the selected period. This will be calculated based on the Depreciation Method selected.

2.2 Accounting Details 

The following account details can be set to record asset values in the ledger:

• Company
• Fixed Asset Account
• Accumulated Depreciation Account
• Depreciation Expense Account
• Capital Work In Progress Account

An Asset is any valuable Item owned by a Company.

Furniture, computers, mobile phones, printers, cars, manufacturing equipment are examples of assets. Generally, an asset is a tangible item that is located on the company premises or is carried by an employee. In some cases, an asset could be an intangible item.

An asset’s useful life spans across multiple years and hence its economic value is spread over corresponding years from the accounting perspective. If you buy a printer for $300 and it is expected to be useful for three years, from the accounting perspective $100 is recorded as the expense for three years each instead of all the $300 in the first year. Most countries have rules for such calculations.

In IONIC ERP, the Asset record is the heart of asset management module. All the transactions related to an Asset like purchasing, depreciation, maintenance, movement, scrapping, sales will be recorded against the Asset record.

To access the Asset list, go to:

Home > Assets > Assets > Asset

1. Prerequisites 

Before creating and using Asset, it is advised to create the following first:

• Item with ‘Is Fixed Asset’ enabled.
• Asset Category

2. How to create an Asset 

An Item representing the asset should be created. The ‘Maintain Stock’ should be unchecked and ‘Is Fixed Asset’ must be checked.

2.1 Auto creation of assets 

You can configure IONIC ERP to automatically create assets on submission of Purchase Receipt by enabling ‘Auto Create Assets on Purchase’ in Item.

If you have enabled auto asset creation for the item representing an asset, you will have to provide the asset location while submitting the Purchase Receipt.

A message confirming the creation of assets is displayed on submission of Purchase Receipt.

2.2 Manual creation of assets 

If you would like to create assets manually, create an Item with ‘Is Fixed Asset’ enabled and leave ‘Auto Create Assets on Purchase’ unchecked . On submission of a Purchase Receipt/Purchase Invoice with that Item a message is shown indicating that you need to create assets manually.

Follow below steps to create assets manually.

1. Go to the Assets list, click on New.
2. Enter a name for the asset.
3. Select the Item Code. Item Name and Asset Category will be fetched automatically.
4. Select the Asset Owner, i.e. Company, Supplier, or Customer.
5. Select the Company/Supplier/Customer.
6. Select the Purchase Receipt/Purchase Invoice. Purchase Date and Gross Purchase Amount will be fetched automatically.
7. Select a Location. Eg: Mumbai Office. This will be fetched automatically if specified in Purchase Receipt items table
8. Set Available-for-use Date. The depreciation will be calculated starting from this date.
9. Save and Submit.

Please note you need create one asset record for each asset you have bought. If you have bought five computers and have created just one Purchase Receipt with quantity set to five then you will have to create five asset records manually.

2.3 Importing existing assets 

When you move from a legacy system to IONIC ERP, you will have to add details of all the assets your company has purchased previously along with depreciation details of each asset.

For an existing asset, you can create the asset record directly by checking “Is Existing Asset” checkbox and provide below details.

• Gross Purchase Amount
• Purchase Date
• Available-for-use Date
• Opening Accumulated Depreciation: The accumulated depreciation amount which has already been booked for an existing asset.
• Number of Depreciations Booked: Number of depreciation entries already booked.

Based on these details the schedule for depreciation of remaining amount will be created automatically.

To know more, visit the Purchasing an Asset page.

2.4 Additional options when creating an Asset 

1. Custodian: The employee who will carry the asset.
2. Department: The department of the Custodian.
3. Next Depreciation Date: Mention the next depreciation date, even if it is the first one. If the asset is an existing one and depreciation has already been completed, leave it blank.
4. Calculate Depreciation: Enable this checkbox to calculate depreciation of Assets.
5. Allow Monthly Depreciation: Enable this checkbox to distribute depreciation amount of an asset into 12 months of the year. Depreciation entries will be made every month on the date provided as Depreciation Start Date. For example, if Available for Use date is 22nd Nov 2019 and depreciation Start Date is 31st March 2020, first depreciation will be done on 30th Nov 2019 second on 31st Dec 2019 and so on. Amount will be distributed based on days left until next depreciation.

4. Features 

4.1 Depreciation 

• Frequency of Depreciation (Months): The number of months between depreciations.
• Total Number of Depreciations: The total number of depreciations during the useful life of the Asset. In case of existing assets which are partially depreciated, mention the number of pending depreciations. For example, if you set frequency as 12 months and no. of depreciations as 3, 1 depreciation will be booked every 12 months for 3 years.
• Depreciation Method: These are three methods used for depreciation :
  • Straight Line: This method spreads the cost of the fixed asset evenly over its useful life.
  • Double Declining Method: An accelerated method of depreciation, it results in higher depreciation expense in the earlier years of ownership.
  • Written Down Value: In this method, the depreciation percentage is fixed but it is applied on the current value of the asset which we get after each depreciation. To know about Asset Depreciation in detail.
• Depreciation Start Date: The date from which booking of depreciation will be started.
• Expected Value After Useful Life: Useful Life is the time period over in which the company expects that the asset will be productive. After that period, either the asset is scrapped or sold. In case it is sold, mention the estimated value here. This value is also known as Salvage Value, Scrap Value, or Residual Value.
• Rate of Depreciation: This will be calculated based on the amount entered in expected value after useful life.

4.2 Depreciation Schedule 

On booking depreciations against this Asset, the Depreciation Schedule section will be visible. This table has columns for Finance Book, Schedule Date, Depreciation Amount, Amount Depreciated, and Journal Entry.

Note: The Finance Book column will only be visible if Enable Finance Book is checked in the Company Master.

4.3 Insurance Details 

If Insurance has been taken for the Asset you’re recording, you can store the following Insurance details:

• Policy number
• Insurer
• Insured value
• Insurance Start Date
• Insurance End Date
• Comprehensive Insurance

4.4 Accounting Entries 

On submission of an asset, “Capital Work in Progress” account will be credited and the asset account related to the asset will be debited. Submission is only possible after entering “Available-to-use Date”. If “Available-to-use Date” is a future date, then accounting entry will be booked automatically on that date via the scheduler.

4.5 Maintenance 

Ticking on Maintenance Required allows recording Asset Maintenance entries for this Asset. To know more, visit the Asset Maintenance page.

4.6 After Submitting 

Once you create an Asset, you’ll see options to transfer, scrap, or sell the asset. From the Make button, you can adjust its value and make a depreciation entry.

The Asset Maintenance Team is responsible for carrying out maintenance activities on the Asset.

The maintenance activities can be cleaning, polishing, servicing, or any other activity required to maintain the Asset in good condition.

To access the Asset Maintenance Team, go to:

Home > Assets > Maintenance > Asset Maintenance Team

1. Prerequisites 

Before creating and using Asset Maintenance Team, it is advised to create the following first:

• Employee
• Asset

2. How to create an Asset Maintenance Team 

1. Go to the Asset Maintenance Team list, click on New.
2. Enter a name for the team.
3. Select a manager for the team.
4. In the Maintenance Team Members table, add the team members and select their maintenance roles.
5. Save.

Asset Repair refers to any activity carried to repair a broken Asset to restore full functionality.

You can also maintain the records of Repair/Failures of Assets which are not listed in Asset Maintenance.

To access the Asset Repair list, go to:

Home > Assets > Maintenance > Asset Repair

1. Prerequisites 

Before creating and using Asset Repair, it is advised to create the following first:

• Asset

2. How to create an Asset Repair 

1. Go to the Asset Repair list, click on New.
2. Select the Asset.
3. Select the Failure Date.
4. Enter the Repair Cost.
5. Save.
6. Change the Repair Status from ‘Pending’ to ‘Completed’, or ‘Canceled’.
7. Select a Purchase Invoice if Repair Cost is greater than zero.
8. Save and Submit.

Note: Alternatively, you could open the record for the Asset in question and click on the Repair Asset button under Manage, and then follow steps 3-8.

2.1 Additional options when creating an Asset Repair 

• Capitalize Repair Cost: If checked, the Repair Cost will be added to the Asset’s value. This could also allow you to increase the Asset’s life.
• Increase In Asset Life(Months): The number of months by which the Asset’s life might be extended by the repair can be added here. This will modify the Depreciation Schedule of the Asset. This field will only be visible if Capitalize Repair Cost is checked.

• Stock Consumed During Repair: Checking this will allow you to make a note of all the Stock Items consumed during the repair.
• Warehouse: The Warehouse from which the Stock Items consumed during the repair were taken should be entered here, if Stock Consumed During Repair is checked.
• Stock Items: Entering Stock Items consumed during the repair here will create a Stock Entry record of type Material Issue for them, thereby decreasing their quantity. GL Entries will also be created for each Item in the table. This table will only be visible if Stock Consumed During Repair is checked. In case of Serialized Items, the Item row can be expanded to reveal the Add Serial No button.

• Error Description: A detailed descripton of the problem can be entered here.
• Actions Performed: A sequence of actions performed to carry out the repair can be noted down here.

3. Features 

3.1 Accounting Dimensions 

Accounting Dimensions let you tag transactions based on a specific Territory, Branch, Customer, etc. This helps in viewing accounting statements separately based on the selected dimension(s). To know more, check help on Accounting Dimensions feature.

Note: Project and Cost Center are treated as dimensions by default.

3.2 Purchase Invoice 

A Purchase Invoice can be linked with the Asset Repair, to account for any Items that need to be purchased to carry out the repair or the repair service offered.

3.3 Total Repair Cost 

If Stock Consumed During Repair is checked, the Total Repair Cost will be computed based on the value of the consumed Stock Items and the Repair Cost entered.

When an asset is no longer usable, it is scrapped.

You can scrap an asset anytime using the “Scrap Asset” button in the Asset record. You will be asked for confirmation, click on Yes and the asset will be scrapped.

The “Gain/Loss Account on Asset Disposal” account mentioned in the Company is debited by the Current Value (After Depreciation) of the asset.

A Journal Entry will be created if you scrap an asset:

After scrapping, you can also restore the asset using “Restore Asset” button from the asset master.

To sell an asset, open the asset record and clicking on the Sell Asset button. This will take you to a Sales Invoice. In the Sales Invoice, enter details like Customer and Payment Due Date.

On submission of the Sales Invoice, following accounting entries will take place:

• “Receivable Account” (Debtors) will be debited by the sales amount.
• “Fixed Asset Account” will be credited by the purchase amount of asset.
• “Accumulated Depreciation Account” will be debited by the total depreciated amount till now.
• “Gain/Loss Account on Asset Disposal” will be credited/debited based on gain/loss amount. The Gain/Loss account can be set in Company record.

The system automatically creates a depreciation schedule based on the Depreciation Method, Total Number of Depreciations, etc., and other related inputs like Available to Use Date in the Asset record. It is also possible to create multiple depreciation schedules for different Finance Books. You need to tick the Calculate Depreciation checkbox while creating an asset if you want the system to create the depreciation schedule.

Different depreciation methods in IONIC ERP: 

• Straight line: In this method, the value of an asset is reduced uniformly over its useful life until it reaches its salvage value. For example: if the asset is worth 1000 and its salvage value is 500 after 5 years, the straight line method would depreciate the asset by 100 every month/year. This method is useful when there is no particular pattern to how the depreciation takes place over a period of time.
• Double Declining Balance: This is also known as 200% declining balance. This method is useful when the asset depreciates fast in the beginning and slows down later. For example: if the asset is worth 1,00,000 and its salvage value is 11,000 after 8 years, the depreciation schedule would be:
  

  Current Value	Depreciation	Booked Value
  1,00,000.00	25,000.00	75,000.00
  75,000.00	18,750.00	56,250.00
  56,250.00	14,063.00	42,187.50
  42,187.50	10,547.00	31,640.62
  31,640.62	7,910.00	23,730.46
  23,730.46	5,933.00	17,797.84
  17,797.84	4,449.00	13,348.38
  13,348.38	2,348.00	11,000.00

• Written Down Value: In this method, you can set a particular rate of depreciation or let the system calculate the rate of depreciation based on the asset’s purchase amount, salvage value and useful life. The rate of depreciation is applied on the current written down value of the asset to calculate the depreciation amount for each year. This method is useful for assets which have higher depreciation in the initial years. For example: if the asset’s purchase amount is 1,000 and rate of depreciation is 10% over 5 years, the depreciation schedule would be:
  

  Current Value	Depreciation	Booked Value
  1,000.00	100.00	900.00
  900.00	90.00	810.00
  810.00	81.00	729.00
  729.00	72.90	656.10
  656.10	65.61	590.49

• Manual: In this method, the depreciation schedule would be created based on the Straignt Line method, but you can edit the schedule dates and depreciation amounts for any period according to your needs.

Automatic depreciation entries 

You can enable booking of depreciation entry automatically from Accounts Settings. This will create depreciation entries automatically on the scheduled dates. Otherwise, you have to create the Journal Entry manually by clicking “Make Depreciation Entry” button in the corresponding Depreciation Schedule row.

Accounting entries on depreciation 

In the depreciation entry:

• “Accumulated Depreciation Account” is credited and
• “Depreciation Expense Account” is debited.

The related accounts can be set in the Asset Category or Company.

Asset value chart 

For better understanding, net value of the asset on different depreciation dates are shown in a line graph.

For purchasing a new asset:

1. Create an Asset Category
2. Create a related Item with ‘Is Fixed Asset’ enabled for creating the asset.
3. You may also enable ‘Auto Create Assets on Purchase’ for creating assets automatically. (Optional)
4. Then, the purchase cycle should be followed for purchasing an asset.
5. Enter the Asset Location in the Items table of the Purchase Receipt or Purchase Invoice through which you are receiving the item.
6. On submission of a Purchase Receipt, based on auto creation checkbox, Asset records will be created automatically. You can then enter other details of the Asset manually from the Asset form.

Following accounting entries will be posted on submission of the Receipt entry if Capital Work In Progress Accounting is enabled in the Asset Category of the purchased asset.

It is noticeable here that, instead of corresponding asset account, Capital Work in Progress (CWIP) has been debited. This is because the asset has only been purchased and it is still not available for use. Until the asset is available for use, the asset value is maintained against this account. On the day when it is available for use, the CWIP account gets credited and corresponding asset account gets debited.

In case of disabled ‘Capital Work In Progress Accounting’ in the Asset Category, the receipt entry will be made against corresponding asset accounts set in the Asset Category.

IONIC ERP also uses a temporary account “Asset Received But Not Billed” (a liability account) which gets credited on submission of Purchase Receipt entry. Later, on submission of Purchase Invoice, this account gets debited/reversed.