Purchasing an Asset
For purchasing a new asset:
- Create an Asset Category
- Create a related Item with ‘Is Fixed Asset’ enabled for creating the asset.
- You may also enable ‘Auto Create Assets on Purchase’ for creating assets automatically. (Optional)
- Then, the purchase cycle should be followed for purchasing an asset.
- Enter the Asset Location in the Items table of the Purchase Receipt or Purchase Invoice through which you are receiving the item.
- 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.
Upon submission of the Receipt entry, if Capital Work In Progress Accounting is enabled in the Asset Category of the purchased asset, the following accounting entries will be recorded:
It’s important to note that instead of debiting the corresponding asset account, the Capital Work in Progress (CWIP) account is debited. This is because the asset has only been purchased and is not yet available for use. The asset value remains associated with this account until the asset becomes available for use. Upon becoming available for use, the CWIP account is credited, and the corresponding asset account is debited.
If ‘Capital Work In Progress Accounting’ is disabled in the Asset Category, the receipt entry will be made against the corresponding asset accounts specified in the Asset Category.
BizCentric also utilizes a temporary account called “Asset Received But Not Billed” (a liability account), which is credited upon submission of the Purchase Receipt entry. Subsequently, upon submission of the Purchase Invoice, this account is debited or reversed.