Asset disposal

Screen management

This window consists of:

• a header recalling the financial asset identification information,
  
• a tab allowing the entry of the disposal parameters. It is also used to cancel the disposal.

Screen management method

The management is the same for this window as for all the actions that can be applied to assets.

It is recommended:

1/ To first enter the disposal parameters.

2/ Then, it is possible:

- Either directly validate the entry of these parameters or request the cancellation of the disposal by clicking on [OK]. A consistency check on the modifications carried out on the asset and any component is then carried out; in the case of an error, a message is displayed preventing the update of the asset; it is then necessary to rectify the parameters containing errors.

- Or go through an intermediate control and adjustment stage of the entered parameters by clicking on the button [Control]. A window is displayed allowing:

- to view the results of the disposal parameter application on the asset and its potential component assets,
- to adjust, under given conditions, the disposal amount calculated for each asset. 
- to identify, by the color display, any assets with errors along with their corresponding error messages. These assets are not updated with the entered parameters; they are displayed with the original parameters. The user can the correct the parameters containing errors.

Click on the [Save] button to validate the parameters, or [Cancel] to cancel the updates.

3/ When the setups are correct, the [OK] button is used to validate their application and to return in modification mode to the Financial assets screen. The disposal is only effective after the saving of the asset; in this case, any component assets are updated at the same time.

Header

Tab Setup definition

Disposal rules applicable to the standard methods

Rules taken into account	Method
- disposal end of previous month - disposal end of current month - disposal end of previous semester - disposal end of current semester - disposal end of previous fiscal year - disposal end of current fiscal year	Can be applied to all methods except: CA- Caducity/gross value RE - Residual
- No charge on the disposal date	Can be applied to the following method: DB - Belgian declining SCD - Spanish continuous declining rate SD - Spanish declining rate IT - Ordinario / Anticipato LP - French straight-line LV - Linear beyond the null VN LB - Belgian straight-line RE - Residual (days)
- 1st asset transferred to the concession	Can be applied to the mode: CA- Caducity/gross value
- Exceptional depreciation = Net value	Can be applied to all methods except: IT - Ordinario / Anticipato

Processing description

Disposal process

• An actual disposal gives rise to the following operations:
  
  Disposal of a Main asset:
  - If the disposal of its component assets is not requested, they are detached from the main asset and become Autonomous. The main asset retains its status Main.
  - If the disposal of its component assets is requested, they are disposed including those already disposed provisionally.
  
  Disposal of a Component asset:
  This asset is detached from the main asset at the time of its disposal and becomes Autonomous.
    
  Disposal of an assetimpaired in the period:
  When entering in the setup screen of the disposal, a message indicates that an impairment loss has been done on the period and that the disposal process will automatically cancel the impairment.
  
  Disposal of an asset to which physical elements are attached:
  All physical elements attached to the asset are automatically disposed. If there are movements pending on the physical elements, these movements will automatically be canceled.
  If the user does not wish to dispose all physical elements, he/she can either detach elements or else submit the asset to a split beforehand.
  The disposed physical elements take on the disposal date and reason of the asset.
  
  Disposal of an asset attached to a granted expense:
  The active disposal process automatically activates the forcing flag of the subsidy amount allocated to each subsidized expense linked to the disposed asset. This amount and the depreciation basis of the disposed asset on the subsidy plan will not be revised using the subsidy calculation process anymore.
  The net value of the subsidy plan (i.e. the subsidy re-integration balance) at the disposal day is taken in exceptional charge on the disposal period or the record period of the disposal in the case of a retroactive disposal.
  
  Disposal of an asset linked to a financial leasing contract:
  This asset is detached from the contract.
  
  Determination of the asset net value at the disposal:
  The net value is calculated as follows:
  - Charge (according to the disposal rule and/or the depreciation method)
  - Impairment increase to transfer as exceptional depreciation (on a standard plan CRC2002-10)
  - Impairment loss reversal, if the IMLRVEISS parameter - Disposal:Impairment loss reversal, of the AAS chapter is set to Yes
  - Exceptional depreciation, if the Disposal rule has the value: Exceptional depreciation = Net value
  - VAT regulation, if the PCOTVAPMV parameter - Inclusion of VAT in the capital gains or losses, of the AAS chapter is set to Yes: the net value is either reduced from the Complementary deduction, or increased from the VAT transfer.
  
  Disposal of an asset having a provision balance of exceptional depreciation at the disposal date:
  The exceptional balance is taken as a whole. On the disposal fiscal year, the asset can thus be subjected to a provision or a derogatory depreciation increase and to a derogatory depreciation increase due to the disposal.
  
  Disposal of an asset containing an impairment balance on disposal date:
  If the company parameter IMLRVEISS (Disposal:Impairment loss reversal has the value Yes, the impairment balance on disposal date is automatically taken. This impairment loss reversal is added to the net value determined after the depreciation calculation.
  Notes:
  - it is the impairment balance after the impairment loss reversal transferred as exceptional depreciation.
  - When the following Disposal rule is applied: Exceptional depreciation = NV, the new net value is kept as Exceptional depreciation.
  
  VAT regulation:
  The actual disposal of an asset can lead to a VAT adjustment process in the CoA plan and if the parameter REGVATIAS - VAT adjustment to be applied to IAS/IFRS valuations, is set to Yes, in the IAS/IFRS plan.
  It corresponds to a global adjustment that applies only to the companies subjected to the French tax system. It consists in carrying out globally and at one time all the annual adjustments which the company would be required to carry out until the end of the adjustment period should its situation, as resulting from the concerned event, stay as it is until then.
  
  The process is carried out if the following conditions are met:
  - its holding type is set to In property or In transfer,
  - its Legal or IAS/IFRS accounting nature is set to Fixed Asset in service; it can also be an asset which nature is Fixed asset in process if the REGENCOURS - Fixed Asset in process: VATadjustment? is set to: Yes.
  
  Notes:
  1/ The period over which a VAT adjustment can be recorded, is automatically determined according to the Tax type and the VAT adjustment reference date (usually, the date of the asset purchase):
  - For the assets which Tax type is Real estate and were purchased as of 01/01/1996, the regulation period is 20 years (1/20th rule).
  - In other cases, the adjustment period is 5 years (1/5 rule).
  2/ The period and the adjustment residual life are displayed in the VAT tab of the Assets management function. These periods apply to whole years: the purchase year and the disposal year thus count as a whole year each.
  
  Adjustment calculation
  When an asset is sold, the adjustment calculation rules are different whether the transfer can be taxed or not.
  
  1/ Non taxable transfer (the VAT rate (ISSVATRAT) for the sale is equal to 0). It mainly deals with the sale of buildings.
  For each of the remaining years of the adjustment period, the asset will be considered as used in an exempted industry that does not entitle to deduction. Its taxation coefficient will automatically take the value: 0 The deduction coefficient due to the event will thus also have the value: 0 
  The adjustment therefore consists in an additional VAT repayment.
  It is calculated in the following way:
  (0 - Effective deduction coefficient) x Invoiced VAT x (Adjustment residual life / Adjustment period life)
  
  Notes:
  - The transfer year is not counted in the residual life.
  - In the event of a non-taxable transfer, the company can transfer some of the initial invoiced VAT to the buyer, in proportion to the remaining adjustment life. The transferable amount is automatically calculated as follows:
  Transferable invoiced VAT = Initial VAT x Adjustment residual life / Adjustment period life
   
  Example:
   Year N: acquisition of a building: 1,000,000 € ex-tax - Invoiced VAT = 196,000 €
  - Liability coefficient = 0.8
  - Taxation coefficient = 0.5
  - Admission coefficient = 1
  --> Deduction coefficient = (0.8 x 0.5 x 1) = 0.4
  - VAT deduction = 196,000 x 0.4 = 78,400 €
  These coefficients do not change in the first 7 years
  Year N+7: transfer of the building to the company E
  --> Global adjustment carried out by the transferor for the 12 remaining years:
  (0 - 0.4) x (196,000 € / 20) x 12 = - 47,040 € to repay
  
  Possible transfer of VAT to the buyer:
  (196,000 € / 20) x 12 = 117,600 €
  
  2/Taxable transfer (the VAT rate (ISSVATRAT) on the sale is superior to 0).
  For each of the remaining years in the adjustment period, the asset will be considered as used in taxed operations, and its deduction coefficient will thus automatically set to 1.
  The adjustment therefore consists in an additional deduction.
  It is calculated in the following way:
  (1 - Effective deduction coefficient) x Invoiced VAT x (Adjustment residual life / Adjustment period life)
   
  Notes:
  - The transfer year is not counted in the residual life.
  - In the event of a transfer carried out before 19/10/2005, the amount of the additional deduction cannot exceed the amount of the VAT on transfer invoiced to the buyer.
   
  Example:
   
   Year N: acquisition of a building: 1,000,000 € ex-tax - Invoiced VAT = 196,000 €
  - Liability coefficient = 01
  - Taxation coefficient = 0.5
  - Admission coefficient = 1
  --> Deduction coefficient = (1 x 0.5 x 1) = 0.5
  - VAT deduction = 196,000 x 0.5 = 98,000 €
  These coefficients do not change in the first 3 years
  Year N+3: transfer of the building to the company E
  --> Global adjustment carried out by the transferor for the 16 remaining years:
  (1 - 0.5) x (196,000 € / 20) x 16 = 78,400 € of additional deduction
  
  The VAT adjustment amounts after a transfer (Additional repayment and Transferable amount to the buyer / Additional deduction) are displayed in the Receipt/Disposal tab of the Assets function.
   
  Determination of P&L amounts on transfer:
  The definition of the capital gain or loss is done as follows:
  Sales price - Net value on disposal completion
  --> if the result is negative, it is a Capital loss
  --> if the result is positive, it is a Capital gain
  
  The net value taken into account on disposal completion, to define the capital gain or loss is calculated according to the chronology indicated above at the paragraph level: Determination of the asset net value at disposal.
  
  Note: No capital gain or loss is calculated:
  - on the Subsidies depreciation plan because this plan does not contain an asset value but rather a part of the subsidy used to finance the whole asset (or part of it),
  - on a plan with a depreciation basis equal to 0 because of the accounting allocation of the asset on an Expenses account.
  
  French tax system:
  Special feature of the 1976 revaluation: for an asset revalued in 1976, the +/- amount on sales is equal to: Price of sale - Fiscal net value not revalued.
• When the company is subject to income tax (parameter CPYTAXRUL - Taxation rule in chapter AAS, group FAS), this +/- value, determined in the fiscal depreciation plan, is distributed in the short term and/or long term.
  The distribution is performed in the following fashion, according to:
  * the Asset nature (depreciable or not)
  * the holding duration of the asset in the company, calculated in days starting from the Reference date. When the disposal concerns a main asset and its components, it is the Reference date displayed on the main asset which is taken into account to define whether the P&L amount calculated for each component is Short term or Long term. When the disposal deals with a component asset (detached at the disposal of its main asset), it is its own reference date which is taken into account.
  
  Example

	Profit amounts		Loss amounts
Element nature	Life < 2 years	Duration = 2 years	Life < 2 years	Duration = 2 years
Depreciable	Short-term	ST within the limit of the fiscal depreciation used, LT beyond	Short-term	Short-term
Non depreciable	Short-term	Long-term	Short-term	Long-term

In the particular case of a transfer completed during an intra-group operation (except an intra-group sale which a ST/LT distribution is made for on the fiscal plan for a French company), the capital gain or loss collected on the fiscal plan for a French company is not ST/LT distributed.

• When the company is subject to corporate income tax (parameter CPYTAXRUL - Taxation rule in chapter AAS, group FAS), these +/- values are considered to be short term, irrespective of the asset nature and holding duration.
   
  BP supplier invoice generation:
   
  If parameter SALINV - Sale invoice to generate (chapter AAS, group FAS) is set to Yes, a BP customer invoice is generated automatically when the reason of the asset disposal is Sales. In this invoice, the information coming from the asset cannot be modified.  The status of this invoice is Not validated. Its accounting allocation is automatically performed. It is the fixed asset account defined in the accounting codes table, for line 11 - Active Element Sale Product, except for companies under the Portuguese or Angolan legislation. For these companies, the code that is used is either the code defined on line 19 - Profit amount on FA sale, or the code defined on line 20 - Loss amount on FA sale.
  If the disposal applies to a main asset and its components, only one customer invoice is generated with as many lines as there are sold assets.
  The reference of the sold asset is automatically entered in the Comment field of the invoice line. 
   
  Fixed asset update:
   
  The following information is updated financial asset record for the asset and for its components if they have been disposed:
  - disposal date
  - Disposal reason
  - Sale amount
  - Disposal rule
  - Invoice reference
  - VAT rule for the disposal
  - VAT rate on sales
  - Invoice reference
  - Buyer
  - Additional CoA and IAS IFRS deduction / payment
  - CoA and IAS IFRS transferable VAT
  - Capital gain or loss reference date for the components updated using the main asset reference date
  The references and descriptions of the disposed assets are displayed in red characters.
  
  Notes:
  
  1/ Once disposed, the asset can no longer be modified. The information concerning the disposal are displayed in the Receipt/Disposal tab of the Assets management function.
  2/ The assets disposed of during the fiscal year of at least one of the contexts or during the following fiscal year can be picked out in the Assetsmanagement function using their references and descriptions, displayed in red. They remain present in the Assets left list.
  The assets disposed in an earlier fiscal year for all the contexts no longer appear in the Assets left list but are displayed in the Disposed assets left list.
  
  Events
  
  - Generation of an Asset disposal event (FASISS), and with an asset in concession managed with the Renewal mode, of a FASCCNISS event - Asset disposal / Provisions.
  * The operational effective date is recorded in the EVTDAT field; it corresponds to the disposal date.
  * The accounting effective date is recorded in the CPTDATINT field; it corresponds to the latest date among the following: Current period end date, Disposal date.
   
  - Update 8.0.0 and higher: generation of a classification for sale canceling event when the asset is classified for sale.
   
  - Production of the accounting journal enabling the user to post this event, if the Entry type linked to the event is set up for the immediate posting of the event.
   
  - Generation of a Disposal event (PHYISS) for each of the disposed physical elements attached to the disposed assets.
  (The user can view the events in the Event Journal window that can be accessed from the Other info tab of the Asset management function (Assets, Physical elements).
   
  
• A provisional disposal carries out the following operations:
  
  Disposal of a Main asset:
  If the disposal of its component assets is not requested, they are not detached and remain linked to the main asset.
  
  Disposal of a Component asset:
  This asset remains attached to its main asset.
  
  Disposal of an asset linked to a financial leasing contract
  This asset remains attached to the contract.
  
  Disposal of an asset attached to one or several physical elements:
  The physical elements are not disposed and remained attached to the asset.
  
  Notes:
  A asset that has been the object of a provisional disposal:
  - remains modifiable,
  - its current period depreciation and FYR calculations are carried out without taking into account its provisional disposal (no end to the depreciation plan on the day of the disposal).
  A provisional disposal is automatically canceled at the time of a Closing process.
  

Disposal cancellation process

Upon saving an asset:

• The information updated during the disposal are reset using their original values.
   
•  Update 8.0.0 and higher: canceling the disposal of an asset classified for sale does not lead to the automatic re-classification of the asset for sale.
   
• When physical elements are attached to the asset, their disposal dates and reasons are cleared.
   
• The cancellation of the disposal of a main asset automatically generates the cancellation of the disposal of its component assets.
   
  Note: the disposal of a component asset independently from its main asset sets the status of this component to Autonomous. The cancellation of this disposal does not lead to a reattachment to the Main asset, the component retains the status Autonomous.
   
• Generation of a disposal cancellation event (FASISS) for the asset and for each of the physical elements attached to the asset (PHYISS).
   
• When a customer BP invoice has been automatically generated during the sale of the asset, the invoice must be canceled manually.
  
  Note:
  
  1/ The cancellation of the disposal of a component asset is not authorized when this asset was disposed at the same time as the main asset which it is linked to. The cancellation must be carried out through the main asset.
  
  2/ The cancellation of an disposal linked to a financial lease contract is not authorized when the disposal is linked to the contract termination or to the recording of the end of the financial leasing contract (disposal reason: End of contract or Contract canceled).

Preset queries

The following preset queries are available as standard in the reference folder:

Code	Title	Contents
FXOUTEX	Asset disposals in the fiscal year	List of the assets disposed in the current fiscal year.

Specific Buttons

Check

This button is used to: To apply the asset disposal or disposal cancellation parameters.   To display a control window used to view the result of applying these parameters on the asset and any component assets, and to adjust, under given conditions, the disposal amount calculated for each of the assets. A first table displays the asset whose disposal is requested as well as the list of its component assets, if it is a main asset. When activated, the flag Detach is a reminder that the disposal of the components has not been requested and that they will be detached upon disposal processing. The following information is displayed for each of the assets that are the object of an disposal:   - The disposal amount. Its value depends on the setup carried out. It can be equal to zero if no sales amount has been entered or if the component asset has been disposed with its main asset and the sales amount has been completely distributed to the main asset. It can also correspond to the net value of the asset in the set up depreciation plan or be the result of the distribution of a global sales amount entered in the setup (depending on the chosen distribution key). When for rounding reasons, the calculation displays a difference between the global sales amount and the total of the sales amounts for the main asset and its component assets, the difference is transferred to the sales amount of the last component asset. When the disposal amount is calculated using the distribution of a global sales amount, the user keeps the possibility to modify the amounts thus calculated. - The VAT owed on disposal amount. This amount is calculated using the information entered in the parameters. This amount is automatically recalculated if the sales amount is modified and if the VAT rule has the value VAT owed on the sales. It can still be modified. - The IAS/IFRS and CoA additional deductible VAT amounts. - The IAS/IFRS and CoA balance sheet values. - The sales invoice reference. The assets with errors can be repaired thanks to a color display showing their reference and description. The Message column is used to view the error reason. These assets are not updated with the entered parameters; they are displayed with the original values. The user can the correct the parameters containing errors. A second table displays the depreciation schedules of the asset highlighted by the cursor in the first table. For each plan is displayed: the Currency of the context management, the Net value at disposal date, the Capital gains or losses, as well as Short and long term capital gains or losses for French companies. Click on [Cancel] to cancel the modifications done in this window or on [Save] to take the modification into account. Then click on [End]. The setups screen appears again, click [OK] to get back to the Financial assets screen, then [Save] to validate the disposal (or the disposal cancellation) of the asset in the database and, if need be, its potential components.

Error messages

The only error messages are the generic ones.

Tables used

Refer to documentation Implementation