Fixed Assets

Overview#

Artifi provides end-to-end fixed asset management covering the full asset lifecycle -- from acquisition through depreciation to disposal. The system supports multi-book depreciation, automated GL posting, and complete audit trails for every asset event.

Key Capabilities#

• 14 Workflow Operations covering categories, lifecycle, acquisition, operations, and depreciation
• Multi-Book Depreciation with support for GAAP, TAX, and IFRS books simultaneously
• Multiple Acquisition Methods including direct purchase, expense capitalization, and construction-in-progress
• Automated Depreciation Scheduling with catch-up for backdated or skipped periods
• Dimension Propagation from source transactions to assets and onward to GL entries
• Reconciliation Tools to verify the asset register matches GL balances
• Complete Audit Trail with full traceability for every lifecycle event

Core Principles#

1. Transactions create GL entries when posted; workflows create asset records and link them. This prevents duplicate GL postings and supports any transaction type as a source.
2. Everything goes through approval workflows for compliance and auditability, with risk-based routing.

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Category Management#

Asset categories define default settings for groups of similar assets (computers, vehicles, furniture, buildings, etc.). Categories are organization-wide, with optional entity-specific overrides.

Creating Categories#

Each category specifies:

• Category code and name (e.g., "COMPUTER" -- Computer Equipment)
• Default depreciation method and useful life
• Default GL accounts (cost, accumulated depreciation, expense)
• Optional salvage value percentage

Entity-Specific Overrides#

When a legal entity needs different settings than the master category, you can create sparse overrides. For example, one entity might use double-declining-balance depreciation for vehicles while others use straight-line. Only the fields that differ need to be specified.

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Asset Lifecycle#

Creating Assets#

New asset records capture:

• Legal entity, category, name, and description
• Acquisition and in-service dates
• Original cost and salvage value
• Depreciation method and useful life
• Depreciation books (1-3 books: GAAP, TAX, IFRS)
• Dimension assignments (department, location, cost center)
• Employee assignment (optional)

Asset creation does not generate GL entries. GL impact happens when the source transaction is posted or through acquisition workflows.

Updating Assets#

Non-financial attributes (name, description, employee assignment, status) can be updated with approval. Changes are tracked in the audit trail.

Attaching Files#

Supporting documents such as invoices, warranties, manuals, and photos can be attached to any asset. File attachments are auto-approved and tracked in workflow history.

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Asset Acquisition#

Artifi supports multiple ways to acquire and capitalize assets, accommodating different business scenarios.

Acquire from Transaction (Primary Method)#

The primary acquisition workflow handles both creating new assets and linking existing assets to transactions. It works with any transaction type -- bills, journal entries, credit card transactions, or bank transactions.

Mode 1 -- Create New Asset: When a transaction has already been posted (e.g., a vendor bill debiting an equipment account), this workflow creates a new asset record and links it to that transaction. No additional GL entry is needed.

Mode 2 -- Link Existing Asset: If an asset record was already created separately, this workflow links it to the source transaction for complete provenance.

Advanced scenarios supported:

Automatic behaviors on acquisition:

• Dimensions from the source transaction line are copied to the asset (if the asset has none)
• A depreciation schedule is generated based on in-service date and useful life
• For improvements, the depreciation schedule is recalculated with the new cost basis

Capitalize Expense#

When a bill was originally posted to an expense account but should be capitalized:

1. The original bill posted as: Debit Expense, Credit AP
2. The capitalization workflow creates a reclassification journal entry: Debit Asset, Credit Expense
3. A new asset is created (or an existing asset is improved)

This is commonly used when a repair turns out to be a major improvement that extends the asset's useful life.

Capitalize Construction-in-Progress (CWiP)#

For projects where multiple bills accumulate in a CWiP account over time:

1. Each bill posts to the CWiP account as costs are incurred
2. When the project is complete, the CWiP capitalization workflow:
   • Creates a journal entry: Debit Asset, Credit CWiP
   • Creates the completed asset record
   • Links all source bills for full traceability
   • Generates the depreciation schedule

Link Source Transaction#

A specialized workflow for cases requiring precise control:

• Partial allocations (splitting a transaction line across multiple assets)
• Non-acquisition links (repairs, maintenance tracking)
• Retrospective documentation of asset provenance

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Asset Operations#

Transfer#

Transfer assets between departments, locations, or cost centers by updating dimension assignments. Transfers are tracked in the audit trail with before/after values. The asset remains with the same legal entity.

Impairment#

Record permanent decreases in asset value due to obsolescence, damage, or market conditions:

• Specify the impairment amount and date
• A journal entry is posted: Debit Impairment Loss, Credit Accumulated Depreciation
• Carrying value is reduced; future depreciation is based on the new value
• Requires multi-level approval (manager + CFO)

Disposal#

Dispose of assets through sale, scrapping, donation, or retirement:

• Specify proceeds (if any) and disposal date
• The system calculates gain or loss automatically
• A journal entry removes the asset from the books
• All future scheduled depreciation is automatically cancelled
• Gain/loss accounts default from the asset category (overridable per disposal)

Example -- Asset Sale:

An asset with original cost of $10,000, accumulated depreciation of $8,000, and sale proceeds of $500 results in a $1,500 loss. The disposal entry debits Cash, debits Accumulated Depreciation, debits Loss on Disposal, and credits the asset cost account.

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Depreciation#

Supported Methods#

Multi-Book Support#

Each asset can have up to three depreciation books (GAAP, TAX, IFRS), each with its own:

• Depreciation method
• Useful life
• Salvage value
• Depreciation schedule

This enables parallel depreciation tracking for financial reporting and tax compliance.

Monthly Processing#

Depreciation runs are a two-step process:

1. Schedule -- Set up the depreciation run for a specific book and fiscal period
2. Process -- Execute the run, calculate depreciation for all active assets, and post the journal entry

The system supports incremental runs -- if new assets are added after a period's depreciation has already been processed, you can run depreciation again and it will only process the new assets.

Automatic Schedule Generation#

When an asset is acquired with an in-service date, a full depreciation schedule is automatically generated. If an improvement is later recorded, the system:

• Preserves all posted depreciation
• Removes unposted scheduled lines
• Recalculates the remaining schedule based on the new cost basis

Catch-Up Depreciation#

For assets placed in service in prior periods, the system automatically calculates and posts catch-up depreciation to bring the asset current.

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Reconciliation#

Available Bills for Acquisition#

Before creating assets, you can review all transaction lines that are available for asset acquisition -- bills posted to asset accounts that have not yet been fully allocated. The tool shows:

• Transaction details (number, date, vendor)
• Line amounts and account information
• Allocation status (available, partially allocated, fully allocated)
• Any assets already linked to each line

This helps identify bills that should have assets created from them and shows partial allocations for tracking purposes.

Fixed Asset to GL Reconciliation#

Compare the fixed asset register to GL account balances to ensure they match. The reconciliation covers:

• Asset cost accounts (total original cost vs. GL balance)
• Accumulated depreciation accounts
• Identification of discrepancies

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Dimension Propagation#

Dimensions (department, location, cost center, project, etc.) flow automatically through the asset lifecycle:

1. Acquisition: Dimensions from source transaction lines are copied to the asset
2. Depreciation: Asset dimensions flow to depreciation journal entries
3. Disposal/Impairment: Asset dimensions flow to disposal and impairment entries

This enables dimensional financial reporting -- for example, depreciation expense by department or asset cost by location -- without manual dimension entry at each step.

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GL Impact Summary#

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Audit Trail#

Every fixed asset event is recorded with:

• Event type (creation, acquisition, transfer, impairment, disposal, depreciation)
• Who submitted and who approved
• Complete workflow history with timestamps
• Links to source transactions and journal entries
• Before/after values for changes

The audit trail provides full traceability from the original purchase through the entire asset lifecycle, meeting compliance requirements for financial reporting and tax purposes.