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.

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.

Balancing SAP Costs Before Importing Into Sage FAS: Live Update 5

A couple of weeks have gone by and we are progressing nice and easy — on schedule and on budget.  Our client has multiple entities (with thousands of data) and we are finished balancing on one and about 95% balanced to another with only 3 more to go. 

The struggle has been with SAP and their transaction codes.  Current FY data is sometimes hidden – which is a small struggle, but we persevere!  Another small struggle for the client is trying to assist us in reconciling starting balances between what SAP could/can handle against what they’ve had to manipulate off-line out of the system.  Hence the reason they are implementing Sage FAS Asset Accounting – NO OFF-LINE ADJUSTMENTS NECESSARY!

Remember when converting and implementing any system for the first time, the VERY first thing you should do is pick a date to balance out to.  This ensures that no data gets left behind and you will have a clean start.

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.

SAP to FAS Implementation: Live Update 3

MILESTONE day!  All data is extracted out of our clients SAP fixed asset system — all done remotely.  As if we were never there… wait, we weren’t. 🙂  Gotta love technology. 

We are now in the process of analyzing their data to find any variances between their Internal / GAAP (which will still be recorded in SAP ERP) and Tax values.  Once we gather that list, we will work with our clients through  the adjustment phase before finalizing data, reformatting and importing into Sage FAS 500 Asset Accounting for test data number 1.

This is a very exciting day for our client – as they see a faint light at the end of their fixed asset tunnel!

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.

Post Recovery Adjustments in Sage FAS

Post Recovery, the adjustment amount would be claimed in the first period after the recovery period. 

For example:  You have a fiscal year-end (FYE) of December.  You have an asset with a remaining net book value (NBV) after the end of its estimated depreciation life — i.e. ended in 10/2010 with a NBV of $250. 

If your company book settings are set to Post Recovery, you will see the $250 in the assets NBV through Q4.  However, after running depreciation in January, 2011 (01/11), FAS will true up the $250 to net to zero.  This will affect your balance sheet for Jan.  Then you can make the adjustment in your GL.

For other questions or inquiries about adjustments in Sage FAS, contact me at (877) 824-6834, email or just reply through the blog.

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