ATFA155 - Asset Extension Routine

CONTENT

1. Overview
   1. Legal Concept
   2. General Concept
   3. Standard Entries Used
2. Scenarios
3. Related Information
4. Other Reference Documents
5. Mental Map

01. OVERVIEW

The Asset Extension routine (ATFA155) makes it possible to increase the asset's useful life, value, or both. Thus, the table of asset Balances and Accounting Data is normalized by creating the type of Asset 11 - Extension.
IMPORTANT!
This routine will be added to Brazil's menu in release 12.1.27.

a. Legal Concept

The Revenue tax law explains that expenses with repair, conservation, or replacement of parts and pieces of the fixed assets of the legal entity which result in an increase in the useful life of the asset must be activated to serve as a basis for future depreciations, as long as this increase in useful life is greater than one year.
Extensions and renovations of assets already capitalized can be added to them and have the monthly depreciation value increased and the term maintained, or they can be considered separate items and have their own depreciation, thus lengthening the life of the asset. This choice can be made according to the company's economic interest, that is, its need to generate expenses.

b. General Concept in the routine

This routine enables you to increase the asset value, changing its useful life or not. Thus, the table of asset Balances and Accounting Data is normalized by creating the type of Asset 11 - Extension.
In the Extension concept, you can change values and extend the lifetime in at least one year, being entered as an expense and fully amortized in the current fiscal year.
In the Incorporation concept, assets are added to the existing structure with the same characteristics, but with a new sequential item code in the same base code.

c. Standard Entries Used

This routine contains the following standard entries; it is necessary to have registered an Asset and the respective Standard Entries:

Note!
In case of using the standard entry 805 - Reversal of Asset form type 01, it must be reversed by deleting the form in the Asset Registration routine (ATFA012)

02. Scenarios

In the extension routine, we have the following options:
Action
Useful life: This determines that the only action taken by the system is to increase the useful life of item type 01. For this case, the values selected in the Method and Useful Life Type fields are discarded.
Value: This determines whether actions taken by the system are for Extension or Incorporation. For this case, you must enter, in Asset Data, option Incorporation, the value in currency 1 (Orig Val C1).
Both: Both actions are taken by the system.
Method
Same asset (Type 11): Extension as an item of existing asset form. An item of type 11 – Extension is created.
New Asset (Incorporation): Adds a new asset form type 01 with the same base code and sequential item. It is associated through the fields N1_BASESUP and N1_ITEMSUP, indicating all assets that are in the same structure.
Same asset (Type 01): Value assigned to the method field automatically and used only when the Action field receives the value 1= Useful Life. In this case, the field will be disabled for editing.
Lifetime Type
Associated: The annual depreciation rate of item type 01 is used as a basis. With the depreciation calculation transactions, annual depreciation rates are generated, in which the useful life of the asset ends together with item type 01. This option calculates the depreciation rate of the new item 11 or the new capitalization based on the useful life of the original asset.
Proprietary: When you choose this option, you must enter, in Asset Data the option Incorporation, the annual depreciation rate must be in currency 1, and the calculation currency of the asset. This rate is used for the new item or incorporation.
IMPORTANT
When you select the Proprietary Useful Life option, the depreciation rate of the asset will not be calculated based on the type 01 of the positioned asset as it is done when it is associated, so it will have a useful life with its own rate entered in the lower grid, unlike the type 01 or other Extensions with associated rates.
Lifetime 
This field is only considered if the Action field is filled out with the value of Useful life or Both. The value to be entered in this field must be at least one period (12 months or 1 year according to the MV_CALCDEP parameter) more than the value of the Current Useful Life (Display Only field).
Example of Useful life
Example
Current useful life 120 months
Value to be entered in Useful life 132 months
Current useful life 10 Years
Value to be entered in Useful life 11 Years
Months already depreciated 2 months
Note: The useful life filled in the appropriate field must be more than one year or 12 months added to the current useful life.

Procedures
Making an extension:

1. In Extension, the registered assets are displayed.
2. Select the asset to extend.
3. Click Extension.
4. A screen is displayed to configure the extension.
5. The items in Asset Data, in the Original option are read-only.
6. Complete the fields as you wish.
7. Check and Confirm the data.
8. Actions are taken according to the settings, and accounting entries are made.
   • The accounting entry to add a new item of type 11 - Extension in the Asset Form is 821 - Asset Value Extension.
   • The accounting entry for incorporation of type 01 - Extension in the Asset Form is 801 - Inclusion of Asset Form Type 01.
9. The system returns to the browser with the registered assets.

Incorporation:
IMPORTANT
In the selection of the Action field, if filled with Value or Both and set the New Asset option (Incorporation), the accounting data, the value, and the depreciation rate must be informed in the lower grid.
If the depreciation calendar defined for type 01 is concerning the whole fiscal year, depreciation transactions of previous periods for the new type 11 are only generated when the depreciation after extension is calculated.
This rule is also valid when some new incorporation is generated.
To perform a reversal:

1. In Extension, the registered assets are displayed.
2. Select the asset to revert.
3. Click Other Actions → Revert.A screen is displayed to configure the reversal.The items in Asset Data, in the Original option are read-only.
4. Check if it is the corresponding extension and Confirm.
5. Actions are taken according to the settings, and accounting entries are made.
   • The accounting entry to revert an item of type 11 - Extension in the Asset Form is 822 - Asset Value Increase Reversal.
   • Deletion of row type 11 in the asset form.
6. The system returns to the main browser after reverting the extension.

IMPORTANT
The extension Reversal option is only available when the extension was generated in the same asset form.
The extension can only be reversed in the month right after the last calculation of depreciation. Just a single extension is reversed at a time, always considering the last one.
Extensions with transactions cannot be reverted. To do this, the reversal of all the transactions of the extension in question must be carried out.
For the increase in useful life, where the depreciation rate of the asset is changed in type 01 (tax), there is no reversal. To do this, the user must access the asset registration routine (atfa012), click the asset that suffered the rate change, click on change and do it manually.
For incorporations that generates a new asset form, this operation can only be canceled by deleting the new form (atfa012).

03. Related Information

Tables:

• SN1 – Fixed Asset File;
• SN3 – Balances and Values File
• SN4 – Fixed Asset Transactions  

Routines Involved:

 04. OTHER REFERENCE DOCUMENTS 

Information on the Depreciation Calculation
About the Asset Extension routine
Calculation used in the Depreciation Rate

04. MENTAL MAP