Not All Sage FAS Users Should be Created Equally

Here at Fixed Asset Consulting, we have been performing many data conversions lately.  Mainly data that has been in the Sage Fixed Assets Depreciation (formerly Sage FAS) and was outsourced.

The biggest problems we are running into during our analysis and process is that those ‘outsourced’ professionals who are using the Sage Fixed Asset System (or any automated fixed asset system) are not entering the asset information in correctly.  Here is a list of what we have been seeing (note: not all the data we are analysing and fixing are from the same source/end users):

  • Bonus depreciation not being utilized consistently.  Some assets have it on, others don’t.  Same property type, same placed-in-service year, etc.
  • Bonus depreciation not being used at all even though the Client is claiming in on their tax returns.  This means that even though the Tax calculations are outsourced, the Client still has to perform off-line adjustments and calculations on a spreadsheet.
  • Inconsistent data entry and misuse of critical depreciation fields.
  • Property Types are incorrectly used. I.e. Buildings and building remodels are set to Personal Property with a 39 year life and a straight-line method.  Should have been set to Real Property.
  • Adjustments were never taken and trued up on the data.  This is causing a lot of over and under depreciated assets to occur at the end of the assets life, creating a NBV on a fully depreciated asset.
  • One line items that represent 3 or sometimes 10 assets.  When reconciling this information back to the customers off-line data or internal data, some of those “assets” where disposed of.  Or… the sum of the 3 assets don’t equal the total amount of the one asset in the outsourced system.

We could go on and on, however, many times this stems from the end-user not being professional trained on the system, being thrown into fixed asset management role without training, not communicating properly with their clients or just not knowing what they are doing.

Not all fixed asset users or those managing fixed asset data should be created equally.  Problem is, many don’t know this is happening until it’s too late.  Don’t be one of them.

ERP Fixed Assets Workflow To Sage FAS Asset Accounting

It’s obvious that companies utilizing an ERP for their fixed asset depreciation and management are getting frustrated – or perhaps they are just now seeing the benefits of implementing a true fixed asset module.  Because of this many are asking what or how do we update FAS Asset Accounting or keep both systems in tune.  Maybe it’s best to just explain what the choices are and we can move on from there.

With this being said, I thought I would explain the two options in a basic format – without giving away all of our knowledge.  After all, this is why we get paid the big bucks – but not as big as an ERP Consultant. 

When implementing a true fixed asset system to work with your ERP system, you have two options:

  1. ERP Parent—FAS Child: Maintain GAAP/Internal depreciation inside ERP asset management and only Federal Tax, AMT and State books in Sage FAS Asset Accounting.  Activity added/updated in ERP, exported out, format updated, imported into FAS AA.  Recommended that you also maintain the GAAP/Internal book in Sage FAS Asset Accounting but only for reconciliation purposes.
  2. FAS Parent—ERP Child: Utilize Sage FAS Asset Accounting for all depreciation—export entries out of AP/PO in ERP.  Upload into FAS, maintain ALL activity in FAS Asset Accounting (no need for disposal and transfer tagging), book depreciation entries into ERP GL.  No reconciliation necessary between ERP asset management and third-party solution. 

From the sounds of it, you would sway towards option 2 – FAS being the asset keeper, organizer, etc.  However, many organizations can’t step away from the ERP being finances Parent / Controller — so then, we are left with implementing option 1.  Either way, it’s far better than what occurs when you DON’T use a third-party solution to run, capture and report on federal tax and state calculations.

SAP to FAS Asset Accounting: Live Update 7

Coming down the home stretch… We are now finalizing the 4562 balances of all six companies!  Guess what happened along the way? 

Through data mining and going through their data output with a fine tooth comb, we discovered millions of dollars worth of discrepancies, for bonus depreciation and mis-appropriated adjustements — in their favor!  What a fun day that was!  As I anticipated, our project has already paid for itself 20 times over and we are 70% finished.  Which leaves a good 30% left for more positive outcomes!

Wow… moving federal tax depreciation and state calculations out of a monster system such as SAP (or any ERP solution) – including to a ton of off-line spreadsheet adjustments, you might actually benefit more than you think!  So… why is it again YOU aren’t making the switch to Sage FAS?  Yes, I know… good question!

Next step in this process, agreeing to State balances and working out Quarterly updates.

100% Bonus Depreciation: Construction Clarification

In reference to the new 100% bonus depreciation rules, the law and the joint committee report seem to allow 100% bonus on all additions of self-constructed property as long as construction did not begin and a binding contract was not entered into prior to January 1, 2008.  Some commentators have come out with their informal view that the intent of Congress was to only allow 100% bonus on self-constructed property if construction began after September 8, 2010.  Under this interpretation, 50% bonus would apply to asset additions if construction began after December 31, 2007 and before September 9, 2010.  

The IRS has promised to issue guidance on this issue, and it is scheduled to be released some time later this month.  We will do our best to keep you posted.

Sage FAS Asset Accounting: Release of Version 2011.1

The moment has arrived for all you Sage FAS Asset Accounting users out there (over 300,000 active users).  The release of version 2011.1!  Yes, it incorporates tax law changes made during the year including the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the Small Business Jobs Act of 2010. 

This release is only available for CURRENT Sage Support members and new licenses.  If you need to renew your support to take advantage of this slick automation and updated depreciation methods and provisions, call me now at (847) 2402981 ext: 164 or shoot me an email with the SUBJECT: RENEW.

The FAS 2011.1 Tax Update contains exciting new features and enhancements to your:

  1. Tax Law Updates: Sage has updated the Sage FAS program to comply with the latest tax law changes:  
  • Updated Tax Forms and Worksheets. The 2011.1 Tax Update includes the updated IRS Form 4562 – Depreciation and Amortization for 2010. 
  • Updated Tax Limits. The 2011.1 Tax Update complies with the scheduled updates to the Section 179 limits and luxury auto limits, including changes to allow up to $250,000 of the Section 179 deduction to be claimed for qualified real property.
  • 168 Allowance of 100% for Certain Property. Assets placed in service after September 8, 2010 and before January 1, 2012 can take a 100% bonus deduction.
  • Extension of Tax Provisions. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 has extended several tax provisions, such as allowing a 15 year estimated life on qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property.

2. Updated Audit Advisor. Sage FAS made the following updates to the Audit Advisor:  

  • Check for the increased Section 179 limits as stated above. 
  • Extend the check for Qualified Restaurant, Leasehold, and Retail Improvement Property. 
  • Added a new check for assets that claimed a 50% 168 Allowance when they are eligible to take the increased 100% depreciation allowance. 
  • Added a new check for real property that may be qualified for the Section 179 expense deduction.

3.  New Sage Timberline Enterprise Link. We have added a new general ledger link that enables you to post depreciation expense and accumulated depreciation from Sage FAS to Sage Timberline Enterprise.

NOTE: Please note that no database conversion is required to upgrade from version 2010.1 of Sage FAS to version 2011.1. However, if you are currently using an older version of Sage FAS, you must first upgrade to version 2010.1 before installing Sage FAS version 2011.1. 

If you DON’T have all the CDs or other material available for versions lower than 2010.1, you need a data schema upgrade.  Contact me today for competitive rates.

SAP Fixed Assets to Sage FAS: Live Update 4

Whew… we have been busy! Extracted five out of six companies out of SAP fixed assets.  Finalizing cost balances between internal books and all federal tax books.  What a mismatch.  Although, we have seen this every time we export out of any ERP.  The disconnect between entry per book. 

This week and next we will be moving on to re-formatting and building the federal tax books.

Preparing our clients import files to include bonus depreciation where necessary is so rewarding – for us and them! They are getting close to being able to throw those spreadsheets and the formulas that are contained with-in – into the electronic trash.

More on Sage FAS software – check out our new facelift at www.FixedAssetSoftware.com.

Bonus Depreciation 2010 and 2011

There seems to be some confusion when it comes to the bonus depreciation effective dates for fixed assets.  When do I use the 50% bonus?  When is the new 100% expensing rule apply? Is it only for 2011 or retroactive?  Allow me to shed some light on the subject for you.

Placed-in-service Date

Bonus Depreciation Level
January 1, 2008 – September 8, 2010

50%

September 9, 2010 – December 31, 2011

100%

January 1, 2012 – December 31, 2012

50%

 Bonus Depreciation and AMT Depreciation Relief

50% bonus depreciation is for qualifying personal property fixed assets placed in service after January 1, 2010 and before September 8th, 2010.

100% bonus depreciation is for qualifying property that is:

  1. Placed in service and acquired after September 8, 2010 and before January 1, 2012
  2. Purchased after September 8, 2010 and before January 1, 2012
  3. Qualified AIRCRAFT or Long-Production-Period placed in service before January 1, 2013

In addition to extending the eligibility period for bonus depreciation on fixed assets, the extension of the placed-in-service deadline also extends the eligibility period for obtaining exemption from the AMT depreciation adjustment.

For 2012, bonus depreciation reverts back to 50 percent and it is the last year bonus depreciation is available.

15-Year MACRS Depreciation

The 15-year recovery period has been extended and retroactive  for both 2010 and 2011.  Assets that qualify:

  • Qualified leasehold improvements,
  • Qualified retail improvements, and
  • Qualified restaurant improvement property has been extended retroactively for 2010 through 2011.

UPDATED 04/01/2011:  Guidance Issued on 100% Bonus Depreciation Rules Tax Advisor Article

Need a better fixed asset solution than your spreadsheet, home-grown database or ERP systememail me today.

IRS Reference for 50% bonus and new Section 179 deductions: http://www.irs.gov/formspubs/article/0,,id=177054,00.html

The information contained in this article does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.

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