This document is used to register record the cost of capital Improvements made to the expenses of enhancing fixed assets and to change the parameters resulted from the improvement. The improvements-updating their parameters resulting from these improvements.
The enhancements:
a) Increase the gross total cost of the fixed asset by cost of capital improvements made to this asset and confirmed by documentsthe expenses incurred for the improvements, supported by documentation.
b) Change the Adjust depreciation calculation parameters, for instance, extend the useful life of the asset, or increase the estimated
such as extending the asset's useful life or increasing estimated production volume.
c) Calculate the depreciation cost in expenses for the month when the capital improvements took placeoccurred.
d) Take into account the Account for costs and receive receipts related to warehouse the storing inventory items extracted from the fixed asset during improvements.
It is available You can find this document under Asset Management > Fixed assets documents Assets Documents > Capital Improvements to Fixed assetsAssets.
Open the document page and click on create option to create a new document
In the main tab, add the entity name and who is responsible for this document.
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In the Fixed assets tab, add the fixed asset which that required the improvement and click on calculate to fill in the current details.
For example, the fixed asset Laptop has net book value-AED 3,000
I can changed the parameters under revised columnFor extracted inventory, we can add the fixed asset, add the item, add the unit cost (this is the cost which will be the cost price of the item)This will reduce the capitalized costinstance, let's say there's a foldable sofa set with a net value of AED 540, reflecting all depreciation accrued over time. The user needs to manually add the fixed asset using the option add, and then click on the "calculate" option to auto-populate the remaining fields related to the asset.
The lower part of the page i.e. Cost of Capital Improvements should align with documents about capital improvements. Costs incurred for services or labor can be classified as capital improvement expenses for fixed assets. To properly allocate these costs to the fixed asset, users should select the "Cost of Capital Improvements" when recording these transactions. Additionally, they should specify the fixed asset as the cost object in the document.
Click on the fill option, to fill in the data related to capital improvement.
vHere are the screenshots of the document showing the recording of capital improvements i.e. through invoices received and cash payments. It will appear in total instead of separate lines.
As the cost is added, this will revise the gross cost and depreciable cost.
Extracted Inventory tab is used to record inventory items that were removed from the fixed asset as part of the capital improvement process.
To add an item:
- Click "Add."
- Choose the fixed asset in the Source Fixed Asset column.
- Select the warehouse in the Warehouse column.
- Optionally, specify a bin location if applicable.
- Select or create an item in the Item column.
- Optionally, add characteristics, batch numbers (if enabled), and serial numbers.
- Specify quantity and unit of measure (UOM).
- Enter the unit cost.
- Amounts are calculated automatically based on quantity and cost.
- Add a description in the Transaction Content column.
- View or update GL accounts if needed in the GL Accounts column.
This process records inventory items taken from fixed assets during capital improvements. This action reduces the capitalized cost, revised gross cost, and revised depreciable cost.
The extracted inventory will be treated as standard inventory.
The extracted inventory will be recorded as regular inventory
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