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.