D365 - FO - Fixed assets

There are typically two kind of assets in a company's balance sheet. Current assets, which a company exhausts over next year or a business cycle whichever is briefer and fixed assets, which are usually not meant for resell as is case of current assets but for internal use of a company. The useful life of fixed assets usually spans over multiple years. Examples of current assets, Cash, AR, Prepaid Expenses, or Inventory, where as Automobiles, Computers, Buildings, Machinery or intangible assets such as copyright are fixed assets. In an automobile dealership, the vehicles can be used as fixed assets e.g. for an employee or for resale are inventory items. The acquisition of a fixed asset is a balance sheet transaction, in the year of acquisition and posted as an asset to a balance sheet account. Fixed assets are expensed or depreciated over their useful life. There are various depreciation methods. Straight line method divides cost of acquisition over service life of an asset. A local legislation should define the rule for depreciation calculation. A net book value review for some extraordinary occurrences in the market should be held monthly, quarterly, semi-annual or annually and an adjustment either write-up or write-down might be necessary to post in balance sheet. This also represents the price effect if company has to reacquire the same asset from market. However, some countries or regions prohibit write-up of assets. When an asset is sold or scrapped, the asset value (original acquisition price) and accumulated depreciation are reversed to remove them from accounting books and surplus or loss on this transaction is posted to profit and loss statement.