Friday, March 12, 2010

Moving Items out of Inventory and into Fixed Assets

I love challenging customers (and partners) to use their Microsoft Dynamics GP system in very innovative ways. I like hearing things like 'this cannot be done' or 'there isn't a way to do that'. If there is a way, trust me, I will find it! One of these ways came in the form a simple question: how would you take an item that is already in inventory and move it to Fixed Assets?

Right off the start gate, I can think of 3 different ways to do this, but the solution I like the most because of its elegance and simplicity is as follows:

1. Setup an inventory site called FA and one called VIRTUAL or I/O (typically you will already have one of these setup if you have been using Inventory Control for a while).

2. Use the In-Transit Trasfer Transactions to transfer from your warehouse to the FA site using VIRTUAL as via site. Click on the Ship button to initate the 'transfer' to a Fixed Assets. In turn, this should create and in and out to your Inventory account -- so far good!

3. Open the Receiving Transaction Entry window in GP and perform an In-transit Inventory receipt type.

4. Select the In-Transit Transfer number and select the item to be transferred to a Fixed Asset.

5. Open the Receiving Item Detail Entry window then mark the Capital Item option.

6. When you click the Capital Item checkbox, click on the expansion button (blue arrow) to open the FA PO Additional Information window to add the asset information.

7. Post the receipt.

Since the Purchase Order Processing module uses a Fixed Assets clearing account to capitalize an item, you should be fine (accounting wise) once the asset is created in FA and you run your FA GL posting routine. There you go! No need to create additional vendors or customers or perform extra gimmicks.

Until next post!

Mariano Gomez, MVP
Maximum Global Business, LLC


Anonymous said...

lovely !!!

Anonymous said...

Printing this off and will be using this method. Thanks for the abundantly useful post!

Frank Hamelly, MCP-GP, MCT, MVP said...

You are the man!!

Anonymous said...

Great advice! But I can't see the "Capital Item" button or expansion button in my Receivings Item Detail Entry Window.
Am I missing some setup step?

Anonymous said...

How about if I have a large inventory item that I want to capitilise but I have smaller inventory items attached to the larger item. I want to capitilise all the of them together… For example I have a Post box that I want to capitilise laying in inventory, this post box has several small inventory items attched to it: nuts, bolts etc. I wish to attach the nuts and bolts etc. to the total cost of the post box to be capitilised. How would I do that? *lost

Mariano Gomez said...

This method is not suitable for assembly or BOM type items.


Edward Thirlwall said...

I know of people who have a storage of items in their inventory who badly need to turn it into fixed asset. This link is something I recommend to them all the time. I would find them storing this link in their bookmarks because it is that useful. I personally love the Dynamics GP system as it is one of the most stable platforms I have used in recent times. It’s probably one of the most popular for businesses and not surprisingly so. Thank you very much for this tip Mariano.

Belinda Allen said...

Sheer Genius my friend!

Mariano Gomez said...

@Belinda: I am sure you can turn this into a video, wink, wink!

Mariano Gomez, MVP

Abu Owais said...

Mariano, really a very good way to capitalize inventory item.

But how can I transfer the Fixed Asset back in inventory and assign the WDV as item's unit cost.

Thanks in advance.

Abu Owais

Haroon Attari said...

Hi Mariano,
Thanks for the post which helped me alot!
I have little confusion. The distribution system is creating is not moving the amount out of inventory account because the system is creating following entries

In-transit transfer
Inventory cost dr
Inventory cost cr

Receiving transaction
Inventory cost dr
Inventory cost cr

FA GL Posting
Asset cost dr
Asset clearing cr

With these Accounting entries the balance is left in following two accounts which is wrong:

Inventory cost dr balance
Asset clearing cr balance

I read you post and you mentioned that the POP module uses clearing account but I think this is not the case. Can you let me know if there is anything which I am missing.

For your information, I have executed the same process in my live, test, and Fabrikam company but the result is same in all three cases.

Will wait to hear from you.


ian said...

I am reviewing this with the hope to use at a client.

echo'ing the last comment about the JE's;

If I follow the logic will you not end up with the fixed asset in both
the inventory account (as it is still in the warehouse) (the screen shot clearly shows the same account being debited and credited) AND
the fixed asset account.

Do I not now have the same thing represented in my balance sheet assets twice?

Anonymous said...

Great post!

Haroon, you need to also do a decrease adjustment in inventory to complete, since you only want that item to live in Fixed Assets and not in inventory.

DR Fixed Assets Clearing Account (as your inventory offset)
CR Inventory