Management of Low Value Assets

Introduction

This document presents the management modes for Low Value Assets, specific to the German and Austrian legislations.

Two different modes of management exist: LVA and Pool.

Management terms of status assets: LVA

• The company is submitted to the German or Austrian legislation.
• The management type of the accounting and financial depreciation context has the value: LVA
• It is possible to create several assets of this type in a fiscal year. Expenses can be attached to them. The amount of expenses and the amount of assets created by direct entry cannot, in principle, exceed the LVA threshold defined in the parameters of the context (non-blocking warning message).
• The creation of an LVA is authorized only in the current fiscal year and/or the next fiscal year. Beyond the next fiscal year, the creation is prohibited.
• The accounting code of an asset of this type must be associated with a fixed asset account whose management type is LVA and whose chart of account is submitted to the German or Austrian legislation.
• An LVA cannot be attached to a main asset.
• A component asset cannot be attached to an LVA.
• The depreciation method of an LVA is freely chosen. Generally speaking, the depreciation follows the 1P mode (depreciation over a single period).
  
  Creation of an LVA by capitalization of expenses:
   
  If the main expense is posted on an LVA-type account:
  
  
  • It is possible to select other expenses also posted on an LVA-type account or any other account (except for Pool-type accounts): the account is automatically transferred to the account of the main expense when the creation of the asset is validated.
  • A non-blocking check is performed to verify that the amount of each of the expenses and the amount of the capitalized value do not exceed the LVA threshold defined in the parameters of the context.
     
  A value posted on a Pool-type account cannot be selected as a main expense.
  
  It is not possible to capitalize expenses whose posting dates are set in different fiscal years.
   
  For analytical postings of assets created through expense capitalizations: see below the principles common to both LVA and Pool.

Management terms of status assets: Pool

• The company is submitted to the German legislation.
  This management mode is obligatory for the fiscal years 2008 and 2009.
• The management type of the accounting and financial depreciation context has the value: "Pool".
• Only one Pool status asset can be created per fiscal year. For creations by direct input, its default value is 0. This only changes through new links to expenses. Though the value is not limited, it should not exceed the Pool limit determined in the context setup (non-blocking warning message).
• The creation of a Pool asset is authorized only in the current fiscal year and/or the next fiscal year. Beyond the next fiscal year, the creation is prohibited.
• The accounting code of an asset of this type must be associated with a fixed asset account whose management type is Pool and whose chart of account is submitted to the German legislation.
• A Pool asset:
  - cannot be deleted if at least one expense is attached to it,
  - cannot be issued or split,
  - cannot be attached to a main asset.
• A component asset cannot be attached to a Pool asset.
• The depreciation method of a Pool asset is freely chosen. Generally speaking, the depreciation follows the Linear mode over a period of 5 years.
  
  Creation of a Pool asset by capitalization of expenses:
  
  A value posted on a LVA account cannot be selected as a main expense.
  
  It is not possible to select a Pool-type expense as a main expense if there is already a Pool asset in the fiscal year.
   
  It is not possible to capitalize expenses whose posting dates are set in different fiscal years.
   
  For analytical postings of assets created through expense capitalizations: see below the principles common to both LVA and Pool.
   
  If the main expense is posted on an Pool-type account:
  
• It is possible to select other expenses also posted on a Pool-type account or any other account (except for LVA-type accounts): the account is automatically transferred to the account of the main expense when the creation of the asset is validated.
• A non-blocking check is performed to verify that the amount of each of the expenses does not exceed the LVA threshold defined in the parameters of the context.

Analytical postings: common principles

A key of analytical distribution is automatically created for the asset according to the analytical distribution present for each expense. This key reference depends on the counter setup used for the numbering of "Prior distribution reference". Its description re-uses the asset reference value.
If new expenses are linked or expenses detached, the distribution for the asset is automatically updated to give an accurate view of the distribution for the expenses.

Example of automatic analytical distribution for an asset created by expense capitalization.

• E1 is an expense of 300 € with the "Prior" analytical distribution that follows:
   
  

  Coefficients	Dimension type 1	Dimension type 2	Dimension type 3
  20	DI11	DI21	DI31
  30	DI12	DI22	DI32
  50	DI13	DI23	DI33

  
  --> Creation of an accounting asset by capitalization of E1 expense.
   
  After creation validation, the analytical distribution is automatically created (distribution of the expense amount on dimensions according to the distribution coefficients set up for the expense):
   
  

  Coefficients	Dimension type 1	Dimension type 2	Dimension type 3
  60 (=300*20/100)	DI11	DI21	DI31
  90 (=300*30/100)	DI12	DI22	DI32
  150 (=300*50/100)	DI13	DI23	DI33

  
  
• E2 is an expense of 300 € with the same Prior" analytical distribution as E1.
  
  --> Update of the asset by capitalization of E2 expense.
  As E2 and E1 have the same analytical distribution, values for E2 expense are aggregated to the amounts of the existing distribution:
   
  

  Coefficients	Dimension type 1	Dimension type 2	Dimension type 3
  130 [=60 + (350*20/100)]	DI11	DI21	DI31
  195 [=90 + (350*30/100)]	DI12	DI22	DI32
  325 [150 + (350*50/100)]	DI13	DI23	DI33

  
   
•  E3 is an expense of 100 € with the "Prior" analytical distribution that follows:
   
  

  Coefficients	Dimension type 1	Dimension type 2	Dimension type 3	Dimension type 4	Dimension type 5
  10	DI11
  20		DI21
  30			DI31
  40				DI41
  50					DI51

  
  --> Update of the asset by capitalization of E3 expense.
   
  As the setup for this expense is different from E1 and E2 setups, the values for E2 expense are not aggregated to the amounts of the existing distribution:
   
  

  Coefficients	Dimension type 1	Dimension type 2	Dimension type 3	Dimension type 4	Dimension type 5
  130	DI11	DI21	DI31
  195	DI12	DI22	DI32
  325	DI13	DI23	DI33
  6.67 (=100*10/150)	DI11
  13.33 (=100*20/150)		DI21
  20 (=100*30/150)			DI31
  26.67 (=100*40/150)				DI41
  33.33 (=100*50/150)					DI51

  
   
• E4 is an expense of 100 € without "Prior" distribution.
  Its distribution is only for dimension 5:
   
  

  Dimension code	Title	Analytical dimension
  DI5	Dimension type 5	DI51

  
  --> Update of the asset by capitalization of E4 expense.
   
  The 100 € amount of this expense is entirely assigned to this dimension:
  
  

  Coefficients	Dimension type 1	Dimension type 2	Dimension type 3	Dimension type 4	Dimension type 5
  130	DI11	DI21	DI31
  195	DI12	DI22	DI32
  325	DI13	DI23	DI33
  6.67	DI11
  13.33		DI21
  20			DI31
  26.67				DI41
  133.33					DI51

  
   
  --> Detaching of D3 expense. The automatic distribution is updated as follows:
   
  

  Coefficients	Dimension type 1	Dimension type 2	Dimension type 3	Dimension type 4	Dimension type 5
  130	DI11	DI21	DI31
  195	DI12	DI22	DI32
  325	DI13	DI23	DI33
  100					DI51