Case: The balance recorded in the Work in Progress GL account from the invoice received invoice must be transferred to Fixed Assets cost, which will then be subject to depreciation.
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In this example, the Invoice received is recorded with expenses allocated to the GL Work in Progress account. Work in Progress (WIP) in Fixed Assets encompasses costs incurred in the acquisition or construction of an asset that is not yet complete, including materials, labor, and overhead. These costs are classified as WIP until the asset is finished and ready for use, after which they are transferred to the Fixed Assets account and depreciated over the asset's useful life.
Installation The installation cost is added in to the expense tab of the invoice received, with Gl work in progress- Main progress—main production.
The below entry will be was created i.e. Dr Work in Progress-Main Production
Cr Current trade payables
- Create WIP Cost Adjustment Document-
With this document, the - The user can manually close WIP accounts by transferring WIP costs to expense GL accounts, Construction-in-Progress, and Capital Improvements accounts, or adjust costs between WIP accounts as needed. Here, the WIP value will be transferred to the Capital improvement account.1
These documents are available if the Advanced Product Costing option is activated in Administration > Settings > Production, with cost objects selected from Items, Projects, Project Tasks, and Customer Orders.
Additionally, enable Enable the Capital Improvements to Fixed Assets option in Administration > Settings > Asset Management to use the Capital Improvements GL account for WIP cost adjustments.
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Select the Capital Improvement to Fixed Assets GL account in the Dr GL Accounts column. Add the dimension for the fixed asset that will receive the improvement, and choose the corresponding expense item.
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Cr Work in Progress-main production
- Create capital improvement to fixed assets document, to transfer the balance from Capital improvement GL to the fixed asset. To know more about this document refer to Capital Improvement to Fixed assetsAssets
Go to Asset management > Management> Capital Improvements to Fixed assets
Create a new document and input the necessary details in the main tab. Next, go to the fixed asset tab, click "Add," and select the fixed asset; most fields will be auto-filled. In the lower pane, add the expense by using the "Fill" option to automatically populate the expense details. Select the relevant expense or enter it manually if required.
Once the expense is added, the gross cost and depreciable cost will be revised.
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- Review the effect of the transaction in the respective GL i.e. Capital Improvements to PPE and Fixed assets at cost.
Once the capitalized cost is recorded as a fixed asset, depreciation will be calculated at the end of each month during the closing process.
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