Process documentationPurchase of Fixed Assets

 

The process for purchasing fixed assets in Russia tracks:

  • Whether you have paid the invoice for an asset

  • Whether you have capitalized it

You must meet both conditions in order to be able to offset the input VAT that you pay on assets.

Prerequisites

You have:

Process

  1. You purchase a new lathe from Moscow Machinery, which the company then delivers.

  2. Moscow Machinery sends you an invoice for the lathe, and your accounts clerk records it in the system in Accounts Payable (FI-AP), following the standard procedure.

    In the invoice, the accounts clerk assigns the asset item to the intermediate asset record that you have created. He also enters a deferred tax code for purchases of assets (in the standard system, V2) – you have entered this tax code in the Customizing activity listed above.

    When the clerk saves the invoice, the system automatically starts tracking the asset item, and records the number of the invoice and line item in the asset document that the acquisition was posted to (see Automatic Tracking of Invoices for APC). It also posts the tax to a deferred tax account.

  3. The production department puts the lathe into use, and the accounts clerk capitalizes the asset accordingly.

    To do so, he settles the costs from the intermediate asset to the real asset master record, following the standard procedure (see Settlement of an Asset under Construction).

  4. The accountant pays the invoice, following the standard procedure.

Result

Now that the asset has been capitalized, and you have paid the invoice, you can offset the VAT that you paid on the acquisition of the lathe. To do so, you proceed as described in Closing for VAT on Assets.

Note Note

As well as acquisition costs that you post to invoices, as illustrated above, the system can also track costs that you post from goods issues to intermediate assets. However, you cannot transfer costs from any other objects.

End of the note.