Asset Retirement
Asset Retirement takes an asset, or some of its units, off the books. It works out the cost, the accumulated depreciation and the book value of the units retired, takes what was received for them, and shows the gain or loss. Save posts it.
What it is for
When an asset leaves, its cost and its depreciation must leave the books with it, and the difference between its book value and what was received is a gain or a loss.
The rule people get wrong: the retirement is dated the day after the asset's last depreciation (or its acquisition, if it was never depreciated). Run depreciation up to the period before the sale first. If anything is posted on the asset after you pick it, Save is refused.
Every field in plain words
Header
Everything down to Asset Retirement Quantity is chosen before Create and locked after it.
| Field | What it means | What to put |
|---|---|---|
| Transaction | The document number | Given on Create. Must not already exist |
| Transaction Journal | The journal | Required. Only journals of the journal nature meant for asset retirements, valid on the posting date |
| Posting Date | The date of the voucher | Required |
| Reason | Why the asset is retired | Pick from the reason list |
| Activity | Sale or retirement | Required. Only the disposal activities: Disposal - Sale, Disposal - Retirement |
| Retirement Type | A type | Shown, but nothing on the screen fills it |
| Asset | The asset | Required. The list shows each asset with its group, class, retirement date and the units still held |
| Asset Group, Asset Class | From the asset | Filled in |
| Retirement Date | The date the asset leaves the ledger | Filled from the asset: the day after its last acquisition or depreciation entry |
| Asset Quantity | The units the asset card holds | Filled in |
| Asset Retirement Quantity | How many units to retire | Required. Not more than the units still held |
| Journal, Journal Indicator, Financial Year, Financial Period | From the journal and the posting date | Filled in |
| Notes | The voucher's header text | Free text |
| Reverse Voucher No, Reverse Date, Reverse Reason, Remarks | Filled when the document is reversed | Shown on a saved document |
Basic tab
| Field | What it means |
|---|---|
| Acquisition Amount | The cost of the units retired, worked out on Create |
| Accumulated Depreciation | Their depreciation so far, worked out on Create |
| Book Value | Acquisition Amount less Accumulated Depreciation |
| Retirement Amount | What was received for them. Type it; 0 for a scrapping |
| Profit Loss Amount | Retirement Amount less Book Value. A minus figure is a loss |
How the amounts are worked out
- Cost per unit = the posted acquisitions and adjustments of the asset / its quantity.
- Depreciation per unit = the initial depreciation and depreciation of the asset / its quantity.
- Each figure on the Basic tab = the per-unit figure x Asset Retirement Quantity.
- Profit Loss Amount = Retirement Amount - Book Value.
The amounts are in the company's own currency. A retirement is always Posted.
How to configure it
- Make a transaction journal of the journal nature meant for asset retirements for this screen.
- On the Fixed Assets posting profile, give each asset group its lines for the disposal activities. See General ledger screens.
- Keep reasons for retirement in the reason list.
Scenarios
- A car with book value 900,000 sold for 1,000,000. Run depreciation to the month before, then retire: Activity Disposal - Sale, quantity 1, Retirement Amount 1,000,000. Profit Loss Amount shows 100,000.
- 3 of 40 chairs broken and thrown away. Disposal - Retirement, quantity 3, Retirement Amount 0. The loss is the book value of the 3 chairs. The other 37 go on depreciating, and their salvage share shrinks to match.
- The sale is cancelled. Reverse the retirement, provided no depreciation or retirement was posted on the asset after it.
What it is connected to
- Asset Master - its quantity limits how many units can be retired.
- Asset Depreciation - must have run to the period before; a later run cannot be reversed past this retirement.
- Asset Acquisition - cannot be reversed once the asset is retired.
- Fixed asset lists and reports - the Asset Retirement list and print.
- What posts in assets and projects.
If something looks wrong
- "There is only ... quantity is left for Retirement". More units than the asset still holds. Lower the quantity.
- "Net book value of the Asset could not be read." or "There is no remaining Asset net book value found". The asset has no posted acquisition.
- "Please check there is any transaction in between that is preventing this transaction from being saved. ..." Something was posted on the asset after its Retirement Date was filled, usually a depreciation run. Start a new retirement so the date is filled again.
- "Asset cannot be empty". Pick the asset before Create.
- "Transaction Already exists". The number is used. Let the screen number it.
- "Posted invoice cannot be deleted". A retirement is reversed, not deleted.
- Reverse is refused: "You cannot Reverse this Transaction, Next Depreciation or Retirement already process". A later depreciation or retirement exists on the asset. Reverse it first.
- "Only Posted Vouchers can be reversed" or "Reverse Date: ... cannot be less than Posting Date: ...". As on every fixed asset document.