Mastering the Month End Close Process with NAV: Fixed Assets and Inventory

Like most ERP solutions, Microsoft Dynamics NAV has a unique way of helping businesses complete the month end close process. Leveraging what is specific to NAV, I’ve put together a series of posts that will help you draft your own period-end checklists, covering the following areas:

• The General Ledger
• Accounts Payable and Accounts Receivable
• Bank Reconciliation and Re-Evaluating Foreign Exchange Balances
• Fixed Assets and Inventory (this blog post)

AUTOMATIC METHOD

Assuming you have set up depreciation on both the level of fixed assets and the depreciation books, a monthly routine can be run to automatically calculate and post the depreciation on your fixed assets.

The routine can be found by either searching for Calculate Depreciation in the search bar or navigating to Departments > Financial Management > Fixed Assets > Periodic Activities > Calculate Depreciation…

[table width =”100%” style =”” responsive =”true”][table_head][th_column][/th_column][th_column][/th_column][/table_head][table_body]
[table_row]
[row_column]Depreciation Book:[/row_column]
[row_column]The option to select between depreciation books, if different books were set up.[/row_column]
[/table_row]
[table_row]
[row_column]FA Posting Date:[/row_column]
[row_column]The “ending date” for the depreciation calculation;[/row_column]
[/table_row]
[table_row]
[row_column]Force No. of Days:[/row_column]
[row_column]The option to override the calculated number of days of depreciation with a user-defined one.[/row_column]
[/table_row]
[table_row]
[row_column]Posting Date:[/row_column]
[row_column]The posting date for the batch. If you’ve enabled FA/GL posting date matching in the Depreciation Book, you can leave this blank.[/row_column]
[/table_row]
[table_row]
[row_column]Document No.:[/row_column]
[row_column]Leave blank to use default FA journal numbering or specify different document number.[/row_column]
[/table_row]
[table_row]
[row_column]Posting Description:[/row_column]
[row_column]The description to be posted to the journal.[/row_column]
[/table_row]
[table_row]
[row_column]Insert Bal. Account:[/row_column]
[row_column]Option to auto-insert the balancing account set up in the FA Posting Group table in your entries.[/row_column]
[/table_row]
[/table_body]
[/table]

This then generates the relevant entries into the FA G/L Journal, which you can the post by click on Post in the ribbon.

MANUAL METHOD

Alternatively, you can manually post the depreciation of a fixed asset using the Fixed Asset General Journal, which you can go to by searching for FA G/L Journals or navigating to Departments > Financial Management > Fixed Assets > FA G/L Journals.

Then you can:

1. Enter your posting date and select:

• Account Type: Fixed Asset
• FA Posting Type: Depreciation
• Amount: A negative integer for the depreciation

2. Click on the Insert FA Bal. Account button in the ribbon;

3. Post the entry

Occasionally, assets encounter permanent losses in value that need to be recorded in the books. This could be due to obsolescence, damage, or other factors. NAV allows you to directly post adjustments to the depreciable base of an asset, thereby allowing for correct depreciation to be calculated and posted in an automated fashion (as discussed above).

The way to post an asset write-down is by:

• Open the Fixed Asset General Journal by searching for FA G/L Journals or navigating to Departments > Financial Management > Fixed Assets > FA G/L Journals.
• Enter your posting date and select:
  • Account Type: Fixed Asset
  • FA Posting Type: Write-Down
  • Amount: A negative integer for the book value write-down

• If you’ve set up the FA Posting Groups with corresponding Write-Down Accounts, you can click on Insert FA Bal. Account in the ribbon;

• Otherwise manually enter the balancing account and remaining Dimensions
• Post the entry

(Same as above, with the exception of setting the FA Posting Type to Appreciation and using a positive integer in the Amount field).

Many organizations will perform regular physical inventory counts and will need to update their inventory on hand accordingly.

Within Dynamics NAV, there is a worksheet that assists with this task, which can be found by searching for Phys. Inventory Journals or by navigating to Departments > Warehouse > Inventory.

You can separate these into batches according to different locations or item categories, or you can use the DEFAULT batch.

When you’ve selected the appropriate batch, you then need to:

• Click on the Calculate Inventory… button in the ribbon (shown below);

Set your posting date accordingly and ensure that both check boxes are selected to have a comprehensive list of inventory;

• If you’re performing specific item or warehouse counts, set the relevant filters in the Item and Warehouse Entry tabs accordingly;
• Click OK to process and populate the journal;

On this screen, you should:

• Go through the list item-by-item and enter the physical quantities in the (Phys. Inventory) column;
• Set the Entry Type to Positive Adjmt. (if you have more inventory on hand than on books) or Negative Adjmt. (if you have less on hand/shrink relative to your books);
• Post the journal when you’re done.

This report helps identify any un-invoiced purchase/sales orders with items that have been received/shipped that appear in the inventory reports, however will not show on the general ledger. These differences will help monitor the entire process of inventory receiving and shipping.

To run this report, either search for Inventory G/L Reconcile report or navigate to Departments > Financial Management > Inventory > Inventory to G/L Reconcile.

• Enter the date you’d like to view the report as of (e.g. November 30, 2014);

Use the Item filters as necessary to report on specific items or item groups.