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1. Openbravo QuickStart 2
User Manual
Chapter 12 – Asset Acquisition
to Dispose
v2.0.1
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Introduction ....................................................................................... 1
Abstract Business Process .................................................................. 2
Roles Involved .................................................................................... 2
Configuration ...................................................................................... 2
Asset Categories ................................................................................ 3
Step-by-Step....................................................................................... 3
Procuring an Asset.............................................................................. 3
Registering an Asset ........................................................................... 3
Defining Depreciation .......................................................................... 4
Time vs Percentage Depreciation ....................................................... 5
Amortizing the Asset ........................................................................... 5
Calculating Amortization ................................................................... 6
Posting Amortization ........................................................................ 6
Disposing of an Asset .......................................................................... 8
Disposing with no Residual Value ....................................................... 8
Disposing with Remaining Residual Value ............................................ 9
Accounting ........................................................................................ 10
Defining Default Accounts for New Asset Categories ...............................10
Defining Accounts for an Asset ............................................................. 0
Introduction
This workflow manages the whole life-cycle of an asset:
• requesting an asset
◦ purchasing a product
• defining the product as an asset
• defining depreciation/appreciation of an asset
• accounting for depreciation/appreciation on a yearly or monthly basis
• disposing an asset
2. Keep in mind that not all processes are explained here since other processes are tied in,
such as Procure-to-Pay.
Abstract Business Process
The abstract asset acquisition to dispose is defined by the following business process
diagram:
The following sub-processes form it:
• Procuring an asset
• Registering an asset
• Defining depreciation/appreciation rule
• Amortizing the asset
• Disposing of an asset
Roles Involved
The following roles are involved with this process:
• For Procure-to-Pay, see the corresponding chapter
• Finance - this roles manages assets in all aspects
• Company Admin - used for configuration of certain elements
Configuration
Before this process can be used, the following elements need to be configured first:
• Asset Categories with accounting
3. Asset Categories
Best way to define accounting for different asset types is through definition of asset
categories. To create asset categories and configure their accounting properties, please use
the Financial Management || Assets || Asset Group window:
Accounting is automatically inherited from the defaults configured within the [Defaults] of
the Accounting Schema window (using the Company Admin role). However, you can and
should change it within the [Accounting] tab. See Accounting section for more details.
Step-by-Step
Procuring an Asset
Please refer to the Procure-to-Pay chapter for information on how to request and procure a
product that will become an asset. Keep in mind that this step is optional. Assets can also
be registered without having to purchase them first. However, if you want to tie an asset to
a purchased product, make sure a product is first defined within Master Data
Management.
Registering an Asset
Switch to Finance role. To register an asset, use the Financial Management || Assets ||
Assets window and create a new record:
4. Items to note:
• Product - If a relation to a product definition (usually the one that was used to
purchase the asset) is required, use this product selector to select it.
• Asset Category - by selecting a mandatory Asset Category, this new asset will
inherit the accounting properties of the underlying category. This accounting will
automatically be entered into [Accounting] tab and can later be manually changed
if required.
• Depreciate - this checkbox will be used later to define the actual amortization
parameters
• [Asset Amortization] - tab where proposed amortization installments will be listed
• [Accounting] - tab where specific accounting settings are for an asset, see section
Accounting for more information
Defining Depreciation
Again, using the Finance role navigate to the Financial Management || Assets || Assets
window and edit the asset previously created. Then, check the Depreciate checkbox to
reveal a set of parameters required to define the depreciation:
Fields to note:
• Depreciation Type - currently, Openbravo ERP only supports Linear depreciation
• Calculate Type - choice between Time and Percentage depreciation type
• Amortize - if Calculate Type is Time, this field gives us a choice of monthly or
yearly depreciation calculation.
5. • Usable Life - Years (or Months in case of Monthly amortization) - the number of
years (or months) to depreciate the asset over
• Purchase Date - the date of purchase of the asset (optional field)
• Depreciation Start Date - this date must be entered in order for the Create
Amortization process to calculate the depreciation postings. (mandatory field!)
• Asset Value - initial value of an asset (mandatory field!)
• Residual Asset Value - value of the asset at the end of the depreciation period (if
this value is entered, the Depreciation Amt. will be automatically calculated)
• Depreciation Amt. - the amount of the initial value to depreciate (if this field is
entered, the Residual Asset Value) will be calculated automatically
• Depreciated Value - a read only field indicating how much of the depreciation
value has already been posted to the general ledger.
• Depreciated Plan - a read only field indicating how much value of the asset will be
depreciated until the end of asset life.
• Previously Depreciated Amt. - the amount that has already been amortized
before the asset was entered into the system. It will be deducted from the full asset
value upon the calculation of the amortization plan.
Time vs Percentage Depreciation
The Linear depreciation type supports calculation over time or percentage.
As shown within the screenshot above, Time calculation enables us to enter the number of
month or years over which the full Depreciation Amt. will be depreciated. The system will
then calculate yearly or monthly postings and enter them into [Asset Amortization] tab.
The second option is Percentage calculation. The example above could also be depreciated
this way:
Fields to note:
• Annual Depreciation % - the percentage of the Depreciation Amt. to amortize
each year.
Amortizing the Asset
Once the asset has been defined and the depreciation parameters entered it is time to
calculate the depreciation postings and post these to the ledger at the end of an accounting
period (month or year).
6. Calculating Amortization
To calculate the amortization, use the Create Amortization button within the Financial
Management || Assets || Assets window. Once the process completes, navigate to the
[Asset Amortization] tab to see the suggestion of amortization postings. For example, if
we had selected amortization over time, specifically over 3 years, this would be the
proposal:
If you are not satisfied with the proposal, you can delete all rows suggested (click on the
first row, press shift and select the last row, press the Delete key and confirm) and click the
Recalculate Amortization back inside the [Assets] tab.
Posting Amortization
Imagine you have defined several assets, each with their own amortization rules.
Amortization needs to be posted for each accounting period (year or month, depending on
the definition and requirements). To do so, navigate to the Financial Management ||
Assets || Amortization window where all periods with at least one asset to be posted in
are listed:
Select the desired period by double clicking on it. The editing screen opens with the
following options:
7. Fields to note:
• Description - enter any notes related to posting amortization of selected period
• Accounting Date - date used to determine which period this posting belongs to
within the general ledger
• Starting Date - determine which starting date the amortization is calculated for
• Total Amortization - field that will be automatically calculated with the total
amortization amount posted for a selected period
To see and doublecheck all the assets whose amortization will be posted within the currently
selected period, click on the [Lines] tab.
And finally, to post the amortization to the general ledger:
1. Click the Process button to complete the amortization posting document
2. If background accounting is enabled, the document will automatically also be posted
to the general ledger within minutes. However, you can always click the Post button
and manually post it and then see the resulting GL entry:
8. Disposing of an Asset
An asset is disposed of once its depreciation plan is over. There are several different cases
to end the lifecycle of an asset.
Disposing with no Residual Value
Once the final amortization installment is processed and posted to the General Ledger,
Openbravo automatically checks off the "Fully Depreciated" field:
9. This field is read-only to the user so only the automatic process can change it upon the final
amortization installment.
Disposing with Remaining Residual Value
If an asset will be completely amortized but still hold a value, the Residual Asset Value
field should be filled out with the remaining value. Upon calculating the plan of amortization
for an asset, Openbravo will then automatically calculate and consider only the actual
Depreciation Amt. :
There are various reasons for remaining residual value being greater than zero:
1. Irreversible loss of asset value - once an amortization is defined and in
progress, a manual correction can be done by using the [Asset Amortization] tab
and changing the Amortization Amount field for the next pending installment
(find the next record that has not been amortized yet). There, change the amount
to reflect the loss of the asset value:
If there are other installments pending (more pending records within the [Asset
Amortization]) delete the remaining lines (lines after the one just edited
previously) manually:
Afterwards, go to the Financial Management || Assets || Amortization window
10. and process and post the customized amortization record (first click the Process
button and then the Post button).
Once the last line has been processed and posted, the asset's amortization plan is
complete and the Fully Depreciated field is now checked off automatically by the
application.
What is left now is to account for the loss of value which is done by G/L Journal (see
user manual for financial processes).
2. The sale of an asset - the process of selling an asset that is still being amortized is
almost identical to the one just described above. It only differs within the last step
where the revenue of the asset needs to be accounted for as opposed to the loss of
value. To do this, a sales invoice needs to be entered for this asset (see Order to
Cash user manual).
Accounting
When posting amortization it is of utmost importance that it is posted to the correct account
within CoA (Chart of Accounts) depending on the asset type.
Defining Default Accounts for New Asset Categories
When defining new asset categories, the accounting for it is automatically inherited from the
default accounts set for assets within the Financial Management || Accounting || Setup
|| Accounting Schema window, the [Defaults] tab:
The following two accounts are defined here:
11. • Depreciation - Account present in the Profit & Loss statement that contains the
expense incurred due to loss of value of the asset. This loss of value originates from
the amortization plan defined for an asset.
• Accumulated Depreciation - Figura en el activo del balance, minorando la
inversión. Es la minoración del valor del activo consecuencia de la depreciación del
inmovilizado material o inmaterial realizada de acuerdo al Plan de Amortización.
Once configured according to the regulations of the specific country, the general ledger
entry that is created as part of posting the amortization will look like:
If you would like to change the accounts that are set by default for newly defined asset
categories, change them within this window.
Defining Accounts for an Asset
When a new asset is created, it will inherit its accounting from the asset category selected
for it (which is a mandatory field). This is the best practice that should be followed. To see
what accounts have been assigned for the accounting of a particular asset, see the
[Accounting] tab within the Financial Management || Assets || Asset window:
The user has the freedom to change them to whichever account required but should
consider twice before doing so. Generally, accounting should be defined on the level of asset
categories and not altered within each individual asset.
When amortization of this asset is posted to the General Ledger, it is posted to the accounts
defined here.