GM-X ERP for Blockchain - The FIXED ASSETS subsystem

By Nelson Nones

20th August 2020
Amended 30th March 2024

Introduction

Organisational Structure

Assets

Business Entities

Asset Ownership

Asset Classification

Depreciation Books

Asset Lifecycle events

Asset data

ASSET table

ASSET_CONTACT_MECHANISM table

ASSET_EVENT table

ASSET_GROUP table

ASSET_SERVICE_TYPE table

ASSET_STATUS_HIST table

ASSET_STATUS_TYPE table

DEPRECIATION_METHOD table

GENERAL_ASSET_ACCOUNT table

PRICE_INDEX table

SERVICE_TYPE table

VINTAGE_ACCOUNT table

Depreciation data

ASSET_BOOK_EVENT table

ASSET_BOOK_PERIOD table

ASSET_BOOK_TYPE table

ASSET_OWNER table

ASSET_OWNER_BOOK table

FAULT_TYPE table

Links to other subsystems

Control Data

Introduction

Fixed assets management is an accounting process that tracks, for financial accounting, maintenance and theft deterrence purposes, tangible and intangible property which a business owns and uses internally or lets out to other parties. It is an important concern of all organisations, regardless of size, due to the challenges of monitoring depreciation status, location, quantity, condition and maintenance in an accurate and timely manner.

Asset tracking processes allow organisations to keep records of the assets they own, the cost and depreciation of each asset, where each asset is located, who has it, when it was checked out, when it is due for return and when it is scheduled for maintenance. The most commonly tracked assets are:

• Land
• Buildings
• Plant and equipment
• Machinery
• Vehicles and heavy equipment
• Furniture, fixtures and fittings
• Long term investments

A popular tracking method uses serial-numbered asset tags, which are labels that often have bar codes. Some methods automate the tracking process using scanners to read bar codes or by attaching radio frequency identification (RFID) tags to assets. For most organisations the best automation practice follows GS1 Global Individual Asset Identifier (GIAI) and Global Returnable Asset Identifier (GRAI) standards for ID keys to assure the global uniqueness of asset tag numbers, and to make the bar codes or RFID tags readable by standard scanners or readers.

Location tracking is an important loss prevention measure which often takes one or both of two approaches. The first is to use physical tracking devices, such as global positioning system (GPS) tracking units, which provide location data in real time. The second tracks possession by responsible parties, which infers the locations of assets based upon the persons or organisations who have accepted responsibility for them.

For capital-intensive organisations, the costs and depreciation of fixed assets can have a significant impact on net income from both a financial accounting and a tax compliance perspective. Although a wide variety of depreciation methods, conventions and useful life assumptions exist for different classes of fixed assets, generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS) often constrain the choices which accountants can make for particular classes of assets. It is also common for the choices allowed by tax authorities to differ from those allowed under GAAP or IFRS, and businesses may wish to exploit these differences in order to minimise their income taxes in a particular year. In this situation organisations must keep separate books for the same asset, one complying with GAAP or IFRS and another complying with tax regulations.

Regardless of how fixed assets are depreciated, organisations can minimise their costs by maintaining those assets effectively in order to minimise unplanned downtime and extend the life cycles of buildings, vehicles, equipment, machinery, furniture, fixtures and fittings. This reduces the need for new and unnecessary asset purchases over the long run. Should any damage, destruction or losses occur, an organisation's fixed asset tracking records are essential for estimating replacement costs and preparing insurance claims.

Organisational Structure

Assets

The GM-X system tracks every fixed asset in the ASSET table. Information maintained at this level is sufficient for tracking asset location, quantity, condition and maintenance.

Location tracking is optional for each asset and can be accomplished in any one or more of the following ways:

• By party_id_issued_to, which links to an entry on the PARTY table in the PARTY subsystem representing the person or organisation currently having care, custody and control of the asset;
• By postal address using contact mechanisms representing postal addresses on the ASSET_CONTACT_MECHANISM table. Postal addresses are maintained on the POSTAL_ADDRESS table in the PARTY subsystem;
• By area_id, which links to an entry on the GEOGRAPHIC_AREA table in the PARTY subsystem. The area_id utilised may correspond to a region for which official price deflator data such as a consumer price index (CPI) is published, allowing an asset's estimated replacement cost to be calculated for insurance purposes;
• By facility_id, which links to an entry on the FACILITY table in the INVENTORY subsystem. Each facility is fixed to a single location;
• By container_id, which links to an entry on the CONTAINER table in the INVENTORY subsystem. Because containers are potentially moveable in the GM-X application, is_moveable on the ASSET table indicates whether or not an asset is moveable or is currently inside (or is) a moveable container; and/or
• By geographic coordinates (latitude, longitude and altitude) representing the current global coordinates reported in near real time by GPS devices fitted to the asset, or local X, Y and Z coordinates within a facility or building.

The maintenance requirements for each asset are kept on the ASSET_SERVICE_TYPE table. Each entry on this table represents a particular maintenance, repair or overhaul procedure recommended by the manufacturer for corrective, preventive or predictive maintenance.

Business Entities

The PARTY, ORGANISATION and PERSON tables contain entries for every organisation or person which is required to be known to the GM-X application.

At least one of these parties is an organisation which is the "client" and it is the one for which the application is being run. This organisation is known as the "functional unit" and can be identified by adding it to the PARTY and ORGANISATION tables using a single party_id. This data provides the following:

• The identity of the internal party in various transactions, such as purchase orders and supplier invoices.
• The home currency for all such transactions, which is known as the "functional currency".

It is also possible for a GM-X installation to handle the business for a group of organisations which do business under separate names, possibly using different functional currencies. Those organisations can be added as functional units to the PARTY and ORGANISATION tables. Each of them is identified in those tables by its own party_id.

The GM-X application can maintain separate general ledgers for these organisations. In this case each of those organisations must be added as a business entity to the FUNCTIONAL_UNIT table using its party_id, in addition to the PARTY and ORGANISATIONN tables.

Asset Ownership

When the GM-X application handles the business for a group of business entities, it is possible for those entities to share the ownership of a single asset. It is also possible for an external party to share the ownership of an asset when the GM-X application handles the business for a single business entity, or a group of business entities, which also partly own the asset. In these situations, separate entries will exist on the ASSET_OWNER table for each owner of an asset who is a functional unit, and each such owner's ownership_pct is recorded in its ASSET_OWNER entry.

Asset Classification

For each of those entities, it may be convenient or necessary for tax compliance reasons to group assets together into general asset accounts. The grouped assets must have the same life, method of depreciation, convention, additional first year depreciation percentage, and year (or quarter or month) placed in service. Certain classes of property, such as vehicles, cannot be grouped with other assets. Depreciation for a general asset account is computed as if the entire account were a single asset. The general asset account to which a particular asset belongs, if any, is the general_asset_account_id on the ASSET table.

Similarly, it may be necessary for historical tax compliance reasons to group assets together into "vintage accounts" consisting of all assets within a class acquired in a particular tax year. Each asset class prescribes useful lives based on the nature or use of the asset. These include general classes such as office equipment as well as industry classes such as assets used in the manufacture of rubber goods. Like general asset accounts, depreciation for a vintage account is computed as if the entire account were a single asset. The vintage account to which a particular asset belongs, if any, is the vintage_account_id on the ASSET table.

If neither method of grouping is required or desired, then depreciation is computed for individual assets.

The GM-X application also provides a third user-defined asset grouping method. The group to which a particular asset belongs, if any, is the asset_group_id on the ASSET table. This method of classifying assets has no impact on depreciation calculations, but is useful when each group of assets is tracked or managed by different departments or personnel within an organisation.

Depreciation Books

Each of the entities which owns an asset may optionally choose to depreciate it using multiple alternative methods; for example when depreciating assets according to GAAP or IFRS and when depreciating the same assets in the manner prescribed by the relevant tax authorities. Accordingly, one or more entries will exist on the ASSET_OWNER_BOOK table for:

• Each entry on the ASSET_OWNER table, when assets are not grouped by general asset account or vintage account; and/or
• Each group of entries on the ASSET_OWNER table having the same general_asset_account_id, useful life, depreciation method, convention, additional first year depreciation percentage and year (or quarter or month) placed into service; and/or
• Each group of entries on the ASSET_OWNER table having the same vintage_account_id, depreciation method and year (or quarter) placed into service. All of those ASSET_OWNER entries must necessarily have the same useful life, convention and additional first year depreciation.

Each entry on the ASSET_OWNER_BOOK table has an asset_book_type_id which links to an entry on the ASSET_BOOK_TYPE table. Each entry on the ASSET_BOOK_TYPE table is user-defined and identifies the purpose of the book; for e.g. "U. S. GAAP" and "U. S. MACRS" (the Modified Accelerated Cost Recovery System which United States taxpayers must use).

Although there is theoretically a nearly limitless number of depreciation books which may be maintained for an individual asset, general asset account or vintage account, no more than three should ever be needed in usual practice. When multiple alternative books are maintained, only one of those books can affect the general ledger as indicated by affects_gl on its ASSET_BOOK_TYPE entry. Therefore, among all the ASSET_BOOK_TYPE entries included on the ASSET_OWNER_BOOK table for a particular asset, general asset account or vintage account, only one of their affects_gl values may indicate YES.

Depreciation is normally calculated on a periodic basis for each entry on the ASSET_OWNER_BOOK table, and the results are stored on the ASSET_BOOK_PERIOD table together with any additional first year depreciation, related expense deductions (for e.g. the Section 179 depreciation deduction in the United States) and income realised from the splitting or disposition of assets.

Asset Lifecycle events

The GM-X application maintains an event history for each asset over its life cycle. The table below describes the 13 different types of events which are tracked:

The event history for each asset also includes an optional history of data point values, or "dots", for various characteristics that are measured periodically. Although these measurements may be taken manually and entered into the GM-X system using the Add Asset Event task, more commonly such measurements are made by sensors and passed automatically to the GM-X system by way of an application program interface (API). Either way, the dots are stored in the ASSET_EVENT table.

Asset data

Figure 1 - Assets

ASSET table

This provides basic information for individual assets.

ASSET_CONTACT_MECHANISM table

This indicates which CONTACT_MECHANISMs are used by which ASSETs.

Here are some examples:

ASSET_EVENT table

This is the optional history of data points ("dots") for each asset and characteristic.

ASSET_GROUP table

This identifies the names of groups to which assets can belong.

Here are some examples:

• Land
• Buildings
• Plant and equipment
• Machinery
• Vehicles and heavy equipment
• Furniture, fixtures and fittings
• Long term investments

ASSET_SERVICE_TYPE table

This holds information about the types of maintenance, repair and overhaul services which can be performed for specific assets.

ASSET_STATUS_TYPE table

This holds information about each asset status.

Here are the values used by the system which cannot be altered:

ASSET_STATUS_HIST table

This holds the status history for each asset.

DEPRECIATION_METHOD table

This holds information about the methods of depreciation or amortisation which can be utilised to measure the capital consumption of assets.

GENERAL_ASSET_ACCOUNT table

This identifies the names of general asset accounts in which assets can be grouped for the purpose of calculating depreciation or amortisation. Each general asset account comprises all assets of a particular class that were acquired during a particular tax year, quarter or month. Depreciation for a general asset account is computed as if the entire account were a single asset.

PRICE_INDEX table

This holds official price deflator data such as a consumer price index (CPI), allowing an asset's estimated replacement cost to be calculated for insurance purposes.

SERVICE_TYPE table

This holds information about the types of maintenance, repair and overhaul services which can be performed for assets.

Here are some examples:

• Aircraft 'A' check performed every 400-600 flight hours, requiring 10 hours minimum.
• Aircraft 'B' check performed every 6 to 8 months, requiring 1 to 3 days.
• Aircraft 'C' check performed every 20 to 24 months, requiring 1 to 2 weeks.
• Aircraft 'D' check performed every 6 to 10 years, requiring up to 2 months.

VINTAGE_ACCOUNT table

This identifies the names of vintage accounts in which assets can be grouped for the purpose of calculating depreciation or amortisation. Each vintage account comprises all assets of a particular class that were acquired during a particular tax year. Depreciation for a vintage account is computed as if the entire account were a single asset.

Depreciation data

Figure 2 - Depreciation Books

Figure 3 - Depreciation Book References

ASSET_BOOK_EVENT table

This contains the event history for each asset and its owners.

ASSET_BOOK_PERIOD table

This contains information about depreciation or amortisation taken for each for asset, vintage account or general asset account book, by fiscal year and period.

ASSET_BOOK_TYPE table

This holds information about the types of depreciation or amortisation books that can be maintained for assets, vintage accounts or general asset accounts.

ASSET_OWNER table

This contains information about the business entities which own each asset.

ASSET_OWNER_BOOK table

This contains information about each of the depreciation or amortisation methods utilised by the business entities which own each asset, vintage account or general asset account.

FAULT_TYPE table

This holds information about the types of faults or breakdowns which may be recorded in the event history for an asset and its owners.

Links to other subsystems

Fixed Assets Control Data

This information exists within a shared table in the MENU database and not a separate table within the FINANCE_FA database. It holds values which can be varied to suit that particular installation. The current values are as follows:

Date created: 20th August 2020

Amendment history:

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