Asset Management
How does GL recognize assets?
Each asset record is tagged with a classification, for example, land, buildings, equipment, etc. and a department code such as police, public works, etc. The system uses the classification and department code to select the GL accounts for posting various types of transactions. Important! The GL accounts need to be set up before continuing onto the following sections.
What is the Acquisition Account?
The Acquisition Account is the capital outlay expenditure account for the original purchase of items.
When an asset is initially purchased, the user will record the purchase, via accounts payable, with an expenditure transaction in a capital outlay account. For the purpose of capitalizing the asset, the system needs to know which capital outlay expenditure account was charged when the asset was purchased.
What is a Capitalization Account?
The Capitalization Account is the balance sheet account that the asset will be posted to when an asset is capitalized.
Capitalization is the process in the system of reclassifying the acquisition expenditure to an asset on the balance sheet; usually annually. The system will debit the capitalization account and credit the acquisition account to transfer the asset from the income statement to the balance sheet.
What is a Disposition Account?
The Disposition Account is an income statement account for recording gain or loss on disposition of asset.
When an asset is disposed, in other words, sold or junked, the system will credit the asset cost (capitalization account), debit the accumulated depreciation account (see the next section for more information), and post any difference to the disposition account as current year income or expense.
What is a Depreciation Account?
Debit Depreciation Account: The debit for depreciation is the expense account that depreciation is charged to.
Credit Depreciation Account: The credit for depreciation is the accumulated depreciation liability account on the balance sheet.
Depreciation entries can be recorded on a monthly, quarterly, semi-annually, or annually. When the depreciation is updated to the general ledger, the expense account is debited and the accumulated depreciation account is credited.
What is a Sales Account?
Debit Sales Accounts: The sale debit is the cash account that will receive the proceeds from the sale.
Credit Sales Accounts: The sale credit is used to record revenue from the sale of asset.
The system assumes that when an asset is sold a debit will be made to a cash account for the sale amount and a corresponding credit will be made to the revenue account. The system will also post an entry to remove the asset from the books by making the entry described in the Disposition Account.
What are Report Only Assets?
Assets can be identified as "Report Only" assets by selecting the Report Only check box. If the General Ledger interface is enabled for Asset Management, the appropriate GL accounts will need to be entered as described above. However, when the transactions will post to a separate Report Only journal in the General Ledger.
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