The Fixed Asset can be procured by 2 method. Process varies slightly based on the way the asset is
-Direct Purchase of Ready to use asset
-Buy components, services and assemble the asset
However the overall flow remains quite similar, which is as follows.
-Budgeting for the Asset: It is a process to allocate fund to get specific asset or a group of asset in a project.
-Purchase Indent : The user of the asset make a request to purchasing function to start the purchasing process.
-Budget verification
-Optional step of Enquiry, Quotation and Tabulation
-Purchase Order: Once the supplier(s) decided and commercial terms and conditions are agreed, PO document created for the asset. Type of Order in Purchase Order must clearly specify it is asset purchase and also separate type is required for ready to use asset or asset to be assembled.
-Receipt of Asset for ready to use asset with Manufacturer Serial Number
-Receipt of component items and services: In this case the items goes into inventory and Capital
-Create Asset Register: System automatically creates entry in asset register for ready to use asset. It will create one asset for each serial numbers. For assets which are taken under Capital Work in Progress. Once the work is completed Asset Installation must be done to indicate the work is completed and asset is ready to use. When the asset enters into asset register, system automatically reduces the inventory of the item.
-Put to use: Once the asset is put to use, the date for put to use must be updated in asset register. This is the information based on which system decided if depreciation calculation should be started or not.
Note: For asset items services should be defined as inventory items so that it can be capitialised