GL Impact

Complete reference for all fixed asset journal entries and general ledger integration.

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Overview

FIXED ASSET GL ACCOUNTS
═══════════════════════════════════════════════════════════════════

BALANCE SHEET (Assets):
├── Fixed Asset Accounts (1500-1599)
│   ├── 1500 Buildings
│   ├── 1510 Machinery & Equipment
│   ├── 1520 Vehicles
│   ├── 1530 Furniture & Fixtures
│   └── 1540 Computer Equipment
│
└── Contra Asset Accounts (1600-1699)
    ├── 1600 Accum Depr - Buildings
    ├── 1610 Accum Depr - Equipment
    ├── 1620 Accum Depr - Vehicles
    ├── 1630 Accum Depr - Furniture
    └── 1640 Accum Depr - Computers

INCOME STATEMENT (Expenses):
├── Depreciation Expense (6100-6199)
│   └── 6100 Depreciation Expense
│
└── Other Income/Expense (7000-7999)
    ├── 7100 Gain on Asset Disposal
    ├── 7200 Loss on Asset Disposal
    └── 7300 Impairment Loss

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Journal Entries by Transaction

Acquisition

ASSET ACQUISITION
───────────────────────────────────────────────────────────

Scenario: Purchase equipment for $25,000

From Vendor Bill:
  Equipment (Fixed Asset)    $25,000  Dr
  Accounts Payable                    $25,000  Cr

From Cash Purchase:
  Equipment (Fixed Asset)    $25,000  Dr
  Cash                                $25,000  Cr

From Expense Report:
  Equipment (Fixed Asset)    $25,000  Dr
  Accounts Payable /
  Employee Payable                    $25,000  Cr

Depreciation

MONTHLY DEPRECIATION
───────────────────────────────────────────────────────────

Scenario: Monthly depreciation of $500

Journal Entry:
  Depreciation Expense       $500  Dr
  Accumulated Depreciation         $500  Cr

Effect:
  - Expense increases (P&L impact)
  - Accumulated Depreciation increases (reduces NBV)
  - Fixed Asset account unchanged

Transfer (Same Subsidiary)

INTERNAL TRANSFER
───────────────────────────────────────────────────────────

Scenario: Transfer from Dept A to Dept B

NO journal entry (only segment change):
  Asset remains in same account
  Department classification changes
  Location classification may change

Transfer (Different Subsidiary)

INTERCOMPANY TRANSFER
───────────────────────────────────────────────────────────

Scenario: Transfer from US to Canada at NBV $15,000

US Subsidiary (Source):
  Intercompany Receivable    $15,000  Dr
  Accumulated Depreciation   $10,000  Dr
  Equipment (Fixed Asset)             $25,000  Cr

Canada Subsidiary (Destination):
  Equipment (Fixed Asset)    $15,000  Dr  (at transfer value)
  Intercompany Payable               $15,000  Cr

Note: May include FX translation if different currencies

Revaluation

ASSET REVALUATION
───────────────────────────────────────────────────────────

Upward Revaluation ($50,000 increase):
  Fixed Asset Account        $50,000  Dr
  Revaluation Surplus                 $50,000  Cr (Equity)

Downward Revaluation ($30,000 decrease):
  Revaluation Surplus        $30,000  Dr (Equity, if exists)
    OR
  Revaluation Loss           $30,000  Dr (P&L, if no surplus)
  Fixed Asset Account                 $30,000  Cr

Impairment

ASSET IMPAIRMENT
───────────────────────────────────────────────────────────

Scenario: Asset impaired by $20,000

Option 1 - Reduce Asset Directly:
  Impairment Loss           $20,000  Dr
  Fixed Asset Account                $20,000  Cr

Option 2 - Increase Accumulated Depreciation:
  Impairment Loss           $20,000  Dr
  Accumulated Depreciation           $20,000  Cr

Effect:
  - NBV reduced by impairment amount
  - Loss recognized immediately in P&L

Disposal

DISPOSAL ENTRIES
───────────────────────────────────────────────────────────

RETIREMENT (Fully Depreciated, No Proceeds):
  Accumulated Depreciation   $25,000  Dr
  Fixed Asset Account                 $25,000  Cr

SALE WITH GAIN (Proceeds > NBV):
  Cash                       $14,000  Dr
  Accumulated Depreciation   $20,000  Dr
  Fixed Asset Account                 $30,000  Cr
  Gain on Disposal                     $4,000  Cr

SALE WITH LOSS (Proceeds < NBV):
  Cash                        $6,000  Dr
  Accumulated Depreciation   $20,000  Dr
  Loss on Disposal            $4,000  Dr
  Fixed Asset Account                 $30,000  Cr

WRITE-OFF (No Proceeds):
  Accumulated Depreciation   $20,000  Dr
  Loss on Disposal           $10,000  Dr
  Fixed Asset Account                 $30,000  Cr

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Complete Journal Entry Reference

Transaction	Debit	Credit
Acquisition (Cash)	Fixed Asset	Cash
Acquisition (Credit)	Fixed Asset	Accounts Payable
Depreciation	Depreciation Expense	Accumulated Depreciation
Revaluation (Up)	Fixed Asset	Revaluation Surplus (Equity)
Revaluation (Down)	Revaluation Loss	Fixed Asset
Impairment	Impairment Loss	Fixed Asset or Accum Depr
Impairment Reversal	Fixed Asset or Accum Depr	Impairment Reversal Gain
Disposal (Gain)	Cash, Accum Depr	Fixed Asset, Gain
Disposal (Loss)	Cash, Accum Depr, Loss	Fixed Asset
Interco Transfer (Source)	Interco Receivable, Accum Depr	Fixed Asset
Interco Transfer (Dest)	Fixed Asset	Interco Payable

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Period Processing

Monthly Close Checklist

FAM PERIOD-END PROCESS
═══════════════════════════════════════════════════════════════════

□ 1. Review pending asset proposals
      - Approve or reject as appropriate
      - Ensure all acquisitions captured

□ 2. Process asset transfers
      - Complete any pending transfers
      - Verify intercompany entries balance

□ 3. Run depreciation
      - Select correct period
      - Run for all asset types
      - Run both book and tax methods

□ 4. Review impairment
      - Assess any indicators of impairment
      - Record impairments if needed

□ 5. Process disposals
      - Record any asset disposals
      - Calculate gain/loss

□ 6. Reconcile GL
      - Tie asset register to GL accounts
      - Verify accumulated depreciation
      - Check contra accounts

□ 7. Generate reports
      - Asset register
      - Depreciation schedule
      - Disposal report

Depreciation Run

DEPRECIATION RUN PROCESS
───────────────────────────────────────────────────────────

Navigation:
  Fixed Assets > Processing > Depreciation

Parameters:
┌────────────────────────────────────────────────────────┐
│ Period:       February 2026                            │
│ Subsidiary:   All                                      │
│ Asset Type:   All                                      │
│ Method:       ● Primary  ○ Alternate  ○ Both          │
└────────────────────────────────────────────────────────┘

Steps:
1. Preview depreciation amounts
2. Review for anomalies
3. Run depreciation
4. System creates JE:
   
   Date: 02/28/2026
   Depreciation Expense - Equipment    $5,000  Dr
   Depreciation Expense - Vehicles     $3,000  Dr
   Depreciation Expense - Computers    $2,000  Dr
   Accum Depr - Equipment                      $5,000  Cr
   Accum Depr - Vehicles                       $3,000  Cr
   Accum Depr - Computers                      $2,000  Cr

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GL Reconciliation

Asset Register to GL

RECONCILIATION PROCESS
───────────────────────────────────────────────────────────

Asset Register Summary:
┌────────────────────────────────────────────────────────┐
│ Category        │ Cost      │ Accum Depr │ NBV        │
├─────────────────┼───────────┼────────────┼────────────┤
│ Buildings       │ $500,000  │ $100,000   │ $400,000   │
│ Equipment       │ $250,000  │ $125,000   │ $125,000   │
│ Vehicles        │ $150,000  │  $90,000   │  $60,000   │
│ Computers       │  $75,000  │  $60,000   │  $15,000   │
├─────────────────┼───────────┼────────────┼────────────┤
│ TOTAL           │ $975,000  │ $375,000   │ $600,000   │
└────────────────────────────────────────────────────────┘

General Ledger Balances:
┌────────────────────────────────────────────────────────┐
│ Account                  │ Balance                    │
├──────────────────────────┼────────────────────────────┤
│ 1500 Buildings           │ $500,000  Dr               │
│ 1510 Equipment           │ $250,000  Dr               │
│ 1520 Vehicles            │ $150,000  Dr               │
│ 1540 Computers           │  $75,000  Dr               │
│ 1600 Accum Depr-Bldg     │ $100,000  Cr               │
│ 1610 Accum Depr-Equip    │ $125,000  Cr               │
│ 1620 Accum Depr-Veh      │  $90,000  Cr               │
│ 1640 Accum Depr-Comp     │  $60,000  Cr               │
└────────────────────────────────────────────────────────┘

✓ Asset Register matches GL - Reconciled

Common Reconciliation Issues

Issue	Cause	Resolution
Asset total mismatch	Missing/extra assets	Review asset register
Depr total mismatch	Missed depreciation run	Run depreciation for period
Disposed assets	Not removed from GL	Verify disposal entries
New assets	Not yet in FAM	Create assets from proposals

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Multi-Subsidiary Considerations

Elimination Entries

INTERCOMPANY ASSET TRANSFER ELIMINATION
───────────────────────────────────────────────────────────

For consolidated reporting, eliminate intercompany balances:

Parent Company Consolidation:
  Intercompany Payable (Canada)      $15,000  Dr
  Intercompany Receivable (US)               $15,000  Cr

Note: Asset remains on consolidated balance sheet
      Only intercompany receivable/payable eliminated

Currency Translation

Item	Translation Rate
Fixed Asset (cost)	Historical rate
Accumulated Depreciation	Historical rate
Depreciation Expense	Average rate
Gain/Loss on Disposal	Transaction rate

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Tax Considerations

Book-Tax Differences

BOOK VS TAX DEPRECIATION
───────────────────────────────────────────────────────────

Asset: Equipment $100,000
Book: Straight Line, 10 years
Tax: MACRS, 7 years

Year    Book Depr    Tax Depr    Difference
────    ─────────    ────────    ──────────
  1      $10,000     $14,290      ($4,290)  ← Deferred tax liability
  2      $10,000     $24,490     ($14,490)
  3      $10,000     $17,490      ($7,490)
...
  8      $10,000      $4,460       $5,540   ← Reverses in later years
  9      $10,000          $0      $10,000
 10      $10,000          $0      $10,000

Deferred Tax Entry (Year 1, 21% rate):
  Income Tax Expense          $XX,XXX  Dr
  Deferred Tax Liability      $XX,XXX  Cr (temporary difference)

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Best Practices

GL Management

Practice	Recommendation
Monthly reconciliation	Tie FAM to GL monthly
Period close	Run depreciation before close
Account structure	Separate accounts by asset type
Audit trail	Maintain supporting documentation

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Related Topics

• Depreciation - Depreciation processing
• Disposal - Disposal entries
• Reporting - GL and asset reports