Value models are the guidelines that determine the treatment of the fixed assets during their entire life. The reference of the term treatment of the fixed assets shows how the system maintains the valuation of the assets for different purposes such as financial reporting, tax reporting, revaluation & disposal of each of the asset.
When preparing the setups for the fixed assets following points to be considered.
- Each fixed asset can be attached to multiple value models, consider ABC Ltd maintains 2 value models for each fixed asset having posting layers as current & tax respectively. When we use the FA journals for different transaction types the system compares the posting layer @ the journal and only allows the value models of similar posting layer.
- Depreciation profiles need to be defined before creating the value models, so that the those can be linked to the value models.
Setting up value models
- Fixed Assets –> Setup –> Value models
- Click New to create a new value model
- Define the name in the Value model field
- Define the Description for the value model
- Select Depreciation checkbox if the asset is depreciable
- Define the Depreciation profile for the value model
- Alternative depreciation profile can be used to define multiple depreciation profiles; such a setup is used when the statutory requirements are such that 2 depreciation methods are combined so that the asset can be depreciated with highest rates.
- Extraordinary depreciation field is used to define ordinary depreciation profile to charge additional depreciation in addition to the regular depreciation
- Round off depreciation: use this field to define the rounding rule of the depreciation value.
- Leave net book value at: use this field to define a minimum book value of the asset to be maintained in the books of accounts. The system does not depreciate the assets once the net book value reaches this level.
- Posting Layer: Determines the posting layer for the fixed assets transactions in Ax
Happy Learning. !