Posts tagged with: AX 2012 R3

FIXED ASSETS DISPOSAL IN MICROSOFT DYNAMICS AX 2012

Introduction

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Fixed Assets during their entire life undergo four phases, of Acquisition, Depreciation, Value Adjustment and Disposal; we can call it Fixed Asset Life Cycle.

Microsoft Dynamics offer several ways to “Acquire”, “Depreciate”, “Adjust” and “Dispose” the assets. The Acquisition can be rotated through Fixed Asset Journal, Vendor Invoice, Inventory to Fixed Asset Journal, and proposals. The same can be done for depreciation and value adjustments.

In today’s’ post, we will go through the process of disposal and discuss the parameters for accounting. We can use “Disposal Sale” and “Disposal Scrap” to dispose the assets; it will lead the net book value of asset to “zero” and lock the asset for future transactions.

Fixed Assets Disposal

The fixed assets which are not in use or outdated or which cannot be repaired or for some other reasons, require being disposed. It is the process whereby organizations write-off the asset from their accounting book by transferring all relative values to a profit and loss account. On the other side, the sales proceeds are also parked to the same account to drive up to profit or loss on sales of fixed asset.

Out of different ways, the following two are commonly used to map the transaction in Dynamics AX 2012.

  • Disposal sale
  • Disposal scrap

Sale is an external disposal, whereas “Disposal Scrap” is considered an internal transaction.

Disposal Sale

Most of the times, fixed assets during their useful life are sold for a one of few reasons, they are no more usable, or the entity has had a change in requirements. Hence, the asset in its useful life can be sold in the market and it brings some sales proceeds as well. In this case the Difference between Cost, Accumulated Depreciation and the sales proceeds is the loss or profit on disposal.

Disposal Scrap

It is the situation where the asset is expired or outdated and has no market value or it cannot be sold in market. In this case the difference between Cost and Accumulated Depreciation is the Loss or Profit on disposal of asset.

 

Disposal of Fixed Assets in Microsoft Dynamics AX 2012

The challenge is to set-up the accounting codes in the parameters so that Microsoft Dynamics AX 2012, uses the appropriate accounts to set-off transactions. The situation becomes more complicated for the organizations where separate main accounts are used for each fixed asset group’s acquisition, depreciation and adjustments.

Fixed Assets Posting Profile holds up the accounts for sales or scrap of fixed assets, as shown in below screen shot.

2 Now, we need to give the “Disposal – Sale” Account, the main account for profit and loss on sales. Appropriate account for profit and loss on scrap of fixed asset can be provided in the particular tab.

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After giving the Disposal – Sale and Scrap accounts click on “Disposals” button at header of this form and select the appropriate type i.e. sale or scrap.

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For every asset group we have to give main accounts for various transactions i.e.:-

  • Net Book Value
    • In the main account field select the asset (cost) account. (to be credited)
    • In the offset account field select the profit and loss account. (to be debited)
  • Depreciation (This Year)
    • In the main account field select the asset (cost) account. (to be credited)
    • In the offset account field select the accumulated depreciation account (to be debited)
  • Depreciation (Prior Years)
    • In case there is separate accounts for prior years accumulation and current accumulation, give prior years accounts here.

In case various accounts are used to park various amounts related to fixed assets, then more lines are required to be added accordingly.

Accounts Codes Used in Screen Shots

Account Type Account Codes
Furniture and Fixture – Cost 3-1-1-1-003
Furniture and Fixture – Accumulated Depreciation 3-1-1-2-001
Gain/Loss on Sales of Fixed Assets 4-2-2-1-001
Accounts Receivable 1-2-1-2-009

 

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Now we process a transaction, through Free Text Invoice for the sale of Fixed Asset. 

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Create a new free text invoice.

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Provide customer name and date at header level of free text invoice.

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Give the fixed asset number in the line details, the value model field will auto populate.

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The main account will also populate as it was given in fixed assets posting profile.

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Proceed to post the invoice.

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Now, go to fixed asset module, select the fixed asset and click the “Value Model” button, this will show the status of asset as “sold”.

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The following is the extract of voucher posted by system for disposal of asset.

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Hope this blog post helps you with fixed asset disposals in AX 2012!

 


Managing Royalties with Microsoft Dynamics AX 2012 R3

Microsoft Dynamics AX 2012 R3, provides functionality to manage royalty agreements and claim amounts, book their accruals and manage payments. In today’s post I will try to explain the procedure of Royalty Management.

What is a Royalty?

Royalties can be defined as paying certain amount to the owner of a property or a brand for the usage of property or brand. Normally, the original owner of a product sells their product against a certain share of future revenues.

The common practice is the usage of Brand names by third party, in this case, a company use a brand owned by another company and pay a specific percentage of sales to the brand owner.

Microsoft Dynamics AX2012 R3 provides complete solution of Royalty Management, whereby, organization can manage royalty agreements, claims and their payments. In the following lines, the solution is illustrated to help consultants and users:-

Royalties Management with Microsoft Dynamics AX 2012 R3

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Parameters – Accounts Payable

In the accounts payable parameters, select the “Broker and Royalty” tab as shown in the following screen shot.

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  1. Starting day of week would be required in case of royalty calculated on weekly basis.
  2. The accrual account is the liability account in which the royalty liabilities would be credited
  3. The expense account is the charge account where the royalties would be charged.
  4. Procurement category is used for vendor invoice creation to pay the royalty liabilities.

 Royalty Agreements

After setting up parameters, the next step is to define the Royalty Agreement, for this purpose, in accounts payable module click common click royalties and then click royalty agreements, as shown in below screen shot.

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The following is the royalty agreement form which has two important parts i.e. Header and Line.

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Royalty Agreement – Header

In the header section of Royalty Agreement, provide the information of vendor to which the Royalty is payable and then provide the basics of calculations.

Field Description
Royalty contract Enter the identifier for the royalty agreement; the identifier is used to determine the royalty type and default ledger accounts for this agreement.
Vendor account Select the vendor for the royalty contract.
Description Enter a description of the agreement.
Unit Enter the unit of measure for the royalty quantity.
Unit type Select or view the royalty agreement unit type. The values are Inventory unit and Catch weight unit.
Unit of measure royalty option Select the unit of measure royalty option for the royalty agreement. This option identifies the unit of measure for the royalty line. If you use the Exact match option, the unit of measure for the royalty line must exactly match the unit of measure specified in the sales order. If not, the royalty does not qualify. If you use the Convert option, the unit of measure for the royalty line is the same as the unit of measure for the royalty agreement. The royalty unit of measure is converted to the sales order unit of measure, or the catch weight unit of measure, based on the option selected in the Unit type field.
Calculation date type Select the date type, which is used for royalty calculation. The values are:

  • Created: The date when the sales order was created
  • Requested receipt date: The requested receipt date of the sales order
  • Requested ship date: The requested ship date of the sales order
Start date Enter the date on which royalty management begins to create accruals based on the agreement. If the agreement is effective immediately, leave the field blank.
End date Enter the date on which royalty will no longer be created based on this agreement. If the agreement does not end, leave the field blank.
Cumulate sales by Select the period during which invoiced lines will be added and compared against the agreement. The options to select from include Invoice, Week, Month, Year or Customized period.
Period type When Cumulate sales by is Customized period, you have to select the period type to cumulate the sales.
Taken from Select whether the royalty value is based on the gross or net of the sales order line.
Accrual account Enter the ledger account to be used for interim liability postings.
Expense account Enter the ledger account to be used for interim expense postings.
Currency The currency type determines the currency in which royalty is remitted. You can specify a generic currency, which is converted on the order, or you can specify a specific currency for the royalty.
Approval required Select if royalties created from this royalty agreement require approval before they are processed to the ledger accounts.
Calculate by Select if the royalty break is based on quantity or amount.
Validated Shows whether the royalty program is validated.
Validated by Shows whether the royalty program is validated.
Item number Select the items which qualify for this royalty agreement.
Product name Shows the product name of the item.
Unit Shows the sales unit of the item.
Site Shows the default sales site of the item.
Warehouse Shows the default sales warehouse of the item.
Location Shows the default issue location at the default sales warehouse.
Note You can enter specific notes for the royalty agreement.

 

Royalty Agreement – Lines

At the line level of Royalty Agreement, provide the information on the basis of which the royalty amounts would be calculated, in also contains the specific items on which royalty has to be calculated. However the item on which the royalties are calculated can be defined at the header level but in case, the royalty is payable to one vendors on all sales and to one another vendor on sales of a specific item, the specific item will be described at the line level.

Field Description
Royalty code Enter the identifier for the royalty agreement; the identifier is used to determine the royalty type and default ledger accounts for this agreement.
Description Enter a description of the agreement.
Vendor account Select the vendor for the royalty contract.
Calculation date type Select the date type, which is used for royalty calculation. The values are:

  • Created: The date when the sales order was created
  • Requested receipt date: The requested receipt date of the sales order
  • Requested ship date: The requested ship date of the sales order
Currency The currency type determines the currency in which royalty is remitted. You can specify a generic currency, which is converted on the order, or you can specify a specific currency for the royalty.
Unit Enter the unit of measure for the royalty quantity.
Amount type Select the amount type of the agreement:

  • Amount per unit: A certain amount per sold unit.
  • Fixed amount: A fixed amount for a range of quantities sold.
  • Percentage: A certain percentage of the net amount sold.
Start date Enter the date on which royalty management begins to create accruals based on the agreement. If the agreement is effective immediately, leave the field blank.
End date Enter the date on which royalty will no longer be created based on this agreement. If the agreement does not end, leave the field blank.

 

Royalty Agreement – Lines – General Tab

 

Field Description
Royalty code Enter the identifier for the royalty agreement; the identifier is used to determine the royalty type and default ledger accounts for this agreement.
Note Enter a comment or note for the agreement.
Description Enter a description of the agreement.
Vendor account Select the vendor for the royalty contract.
Currency The currency type determines the currency in which royalty is remitted. You can specify a generic currency, which is converted on the order, or you can specify a specific currency for the royalty.
Unit Enter the unit of measure for the royalty quantity.
Calculation date type Select the date type, which is used for royalty calculation. The values are:

  • Created: the date when the sales order was created
  • Requested receipt date: the requested receipt date of the sales order
  • Requested ship date: the requested ship date of the sales order
Start date Enter the date on which royalty management begins to create accruals based on the agreement. If the agreement is effective immediately, leave the field blank.
End date Enter the date on which royalty will no longer be created based on this agreement. If the agreement does not end, leave the field blank.

 

Royalty Agreement Lines – Selection Tab

Field Description
Item number Select the items, which qualify for this royalty agreement.
Product name Shows the product name of the item.
Unit Shows the sales unit of the item.
Site Shows the default sales site of the item.
Warehouse Shows the default sales warehouse of the default warehouse.
Location Shows the default issue location of the item.

Royalty Agreement Lines  – Royalty Amount Tab

Field Description
From value From quantity/amount in which a royalty has to be calculated.
To value To quantity/amount in which a royalty has to be calculated.
Value Enter the value of the royalty.

 

Following is the basic process flow for royalty claims, when items which are associated with royalty agreements are invoiced through sales order, the royalty claims are created. The royalty amount can be viewed in sales order line>Price Details>:

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Royalty Claims

Click Accounts Payable>”Royalties”>”Royalty Claims”, to cumulate and process royalty claims.

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In case approval is required on royalties, the royalties can only be cumulated after approval.

The status column on royalty claim provide following information about the claim:-

  • To calculate: The final royalty amount is pending completion of the cumulate royalties run. This status applies to royalty claims that are generated from weekly, monthly or yearly agreements.
  • Calculated: The claim was cumulated and is pending approval.
  • Approved: The claim had been approved if approval is required.
  • Mark: The claim is available for processing.
  • Processed: The claim was processed and a vendor invoice was posted.

Cumulate Royalty Claims

After invoicing the sales order, user has to cumulate royalty claims. This will sum up royalty claims amounts. The royalty amounts can be cumulate on each invoice, week, month, year or a customized period.

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Once the royalties are cumulated and processed, the status of royalty claim will be set as “completed” and the vendor invoice will be posted, which can be paid.

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Your valuable comments and suggestions would be highly helpful to me for my next posts.