Case: The balance recorded in the Work in Progress GL account from the received invoice must be transferred to Fixed Assets cost, which will then be subject to depreciation.
Solution: Create a Work in Progress adjustment document and record a capital improvement entry to Fixed Assets, followed by depreciation using the Month-end closing document.
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 cost is added in the expense tab of the invoice received, with Gl work in progress- Main production.
The below entry will be created i.e. Dr Work in Progress-Main Production
Cr Current trade payables
- Create WIP Cost Adjustment Document- With this document, 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 Capital improvement account.
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 the Capital Improvements to Fixed Assets option in Administration > Settings > Asset Management to use the Capital Improvements GL account for WIP cost adjustments.
Create a new WIP Cost Adjustment document and enter the entity details on the main tab.
On the WIP tab, click Fill to populate all WIP balances, or click Pick Work in Progress to select specific WIP balances.
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.
The entry will be Dr Capital Improvements to Property, Plant, and Equipment
Cr Work in Progress-main production
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