Fixed Asset Manager (FAM) and its supportable aspects in Enterprise Solutions

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Fixed Asset Manager (FAM) and its supportable aspects in Enterprise Solutions


What is Depreciation?

Some assets purchased by a company are useful for more than one year. These assets all
fall into the Balance Sheet category of Fixed Assets, which can inc
lude everything from
vehicles to factory equipment to office furniture. The IRS gets to determine the exact
useful life of all fixed assets. A computer is a good example. Once the IRS decides that a
computer has a five
-

year useful life, a company is then

allowed to take 1/5 of the original
cost of that computer as an expense of doing business for each of the next five years.
This practice of expensing fixed assets over a period of years is called
depreciation.


Why Track Depreciation?

Depreciation is ver
y beneficial to companies because it allows them to increase their
expenses, thereby lowering their taxable income for a number of years, yet they do not
have to spend cash in those years. All the actual cost occurred back when the item was
originally pur
chased. Why not just go ahead and expense the fixed asset when it is
purchased? There are two reasons. First, it would greatly distort the company’s earnings
from year to year. It would be difficult for a bank or an investor to tell how much the
compan
y really earned from operations if their deductions for asset purchases varied
enormously. Second, such a direct expensing practice would violate the accounting
principle of matching revenue and expenses. It seems logical to assume that companies
invest i
n assets because those assets help the company produce revenue over a long
period of time; therefore, the cost of those assets should be deducted from the revenue
they help to produce, hence, depreciation.


So what does FAM have to do with this process?


When a company first buys a fixed asset, an accountant looks at a particular table
published by the IRS to determine the asset’s useful life. The accountant creates what is
called a depreciation schedule, a listing of the amount of depreciation the compan
y can
expense for that item in every year of its useful life. Some assets have a 2
-
year useful
life; some have as much as 30 years. Over time, a company accumulates many assets.
There has to be a place to record all these depreciation schedules in an or
derly way, so
that the accountant can look at a combined listing of all the schedules to determine the
total amount of depreciation available to the company to expense in a given year. The
Fixed Asset Manager serves the purpose of organizing all these tab
les in a useable
fashion.


There are only limited aspects of the FAM that we can support
. This article will
point out the questions we cannot and should not answer and will answer the
questions that will be most common and do not require a response of “As
k your
accountant.” We will also point out some useful parts of the FAM Help Index to
answer customers’ questions about terminology.





What Accounts from the Chart of Accounts are involved with FAM?

There are usually only three accounts involved with fi
xed assets
.

Fixed Assets

-

Balance Sheet account

Accumulated Depreciation
-

a contra asset account on the Balance Sheet

Depreciation Expense
-
an expense account on the P&L

It is typical for companies to have sub accounts under the main Fixed Asset account f
or
each type of fixed asset; for example, a sub for vehicles, one for furniture and office
fixtures, one for manufacturing equipment. Groupings usually consist of assets with the
same useful life.


The same sub accounts usually exist for Accumulated Depre
ciation as for Fixed Assets.
Balance Sheet accounts like Fixed Assets list the original purchase price of an asset,
which almost never changes. Each year, when a company figures its Depreciation
Expense for that year, the same amount is added to Accumula
ted Depreciation on the
Balance Sheet. Accumulated Depreciation is deducted from Fixed Assets on the Balance
Sheet to arrive at a value for Net Fixed Assets, rather than simply changing the original
cost.


Depreciation Expense changes the company’s report
ed profit for the year and therefore
the amount of taxes they pay, consequently, we do not ever want to recommend methods
of calculating depreciation.


Questions we do not answer
:

Should I be taking a depreciation expense?

What does method and convention
mean?

Which method or convention should I use?

HDI calculate depreciation by hand to check the FAM?

HDI know the right useful life?

Why are the numbers/methods different for Federal, State, etc.?

What is a 179 deduction? How do I know if I should or have
taken one?

How do I know what methods or conventions my Accountant used in the past?


There is a very handy
Glossary

under Help right in the FAM. (Help, Help Topics, enter
Glossary, select Index.) Refer the customer to this Glossary for definitions of
meth
ods/conventions, etc. Anything else, refer them to an Accountant who would have
the Depreciation Tables published by the IRS. (Just for your information, method simply
refers to the math used to calculate depreciation. The simplest, called straight line,
as in
our computer example, simply consists of dividing the cost by the number of years of life
and taking the same amount as depreciation each year. Other methods grow considerably
more complex in their calculation. Convention refers to when the calcula
tion starts, such
as the beginning of the month of purchase, the middle of that month, etc.)






Questions we do answer
:


How do I record the purchase or sale of a Fixed Asset in QBS?

It is important to separate the transaction from the depreciation calcu
lation.
Purchases
or sales of fixed assets must be recorded in the data file just like the purchases or
sales of inventory items are recorded; i.e., by creating a bill for the purchase or an
invoice for the

sale.

The bill or invoice creates the liability

to pay for the purchase or the
receivable for the sales price. Only after the transaction is entered will the asset appear
on a Balance Sheet.


To enter the purchase of a new asset in QBS:

1)

Under Lists, enter a new item on the Fixed Asset List.

2)

Go to ve
ndor, enter bill, create the bill for the item, cost will populate based on
the cost in the item you just set up.

3)

It may be necessary to set up a liability account for a note or loan payable
depending on the asset price or purchase terms, rather than using

accounts
payable.


To enter the sale of an existing fixed asset

in QBS:


1)

Enter the sale info in the fixed asset item setup

2)

Go to customers, create invoice, sale price will populate from the item setup.

3)

It may be necessary to set up a note receivable from
the customer based on the
sale price and terms rather then using the accounts receivable.


To enter an asset purchase directly in the FAM
:

1)

Company, Manage Fixed Assets, select Assets in the very top menu bar, select
Add Assets, or use the Add icon in the m
enu bar just below, fill in the info as
indicated. Asset account is the Fixed Asset account from the Balance Sheet, or
possibly a sub
-
account, such as Trucks. Accumulated Depreciation is also a
Balance sheet account under Fixed Assets and there may be a
sub
-
account for
each type of Asset. The Expense account needed is Depreciation Expense, an
Expense account from the P&L.

2)

Fill in the date purchased and the price paid in the first column, which will usually
be Federal. The data will carry all across the

different columns for each
depreciation basis, such as State, book, etc.

3)

Save the asset, Go to the QBS tab, select save in QBS, and the asset will appear
on the fixed asset list. You will still need to enter the actual purchase transaction
in QBS with a
bill.


To record the sale of an asset directly in FAM
:

1)

Click the Disposal tab, enter and save relevant info. Exit FAM, QBS will be
updated. You still need to enter the actual sale transaction in QBS through an
invoice.






I am just starting my data fil
e in QBs. HDI enter my assets into the FAM or Fixed
Asset List in QBs?

Opening Balances in Fixed Asset accounts are entered like any other account when
starting a file. After opening balances are entered, assets can be entered individually in
either the
Fixed Asset List and then synchronized and pulled into the FAM, or directly in
FAM and transferred to the List in QBS when closing the FAM. Entering existing assets
in either the Fixed Asset List or in FAM does not affect the Balance Sheet.


To enter li
st info, start just as you would with a newly purchased item. Select New under
the Fixed Asset List, enter info; or, select Asset in the FAM, Add New, enter info, save,
save in QBs.



How do the FAM and the Fixed Asset List interact?

In the FAM, there is
a
QuickBooks

tab at the top of the default opening page. On the
dropdown for that tab, one of the selections is “Asset Synchronization Options.” This
selection lets the user choose the basis on which the Fixed Asset List will be updated
from info entered

in the FAM and the basis on which the FAM info will be updated from
items entered on changed on the Fixed Asset List in QBs.



How do I import my Fixed Assets into the FAM from another data file?

1)

In the FAM, under File, there is an option to import data i
n a CSV file format.

2)

Once that option is selected, your first screen lets you browse to the location of
the saved file you want to import.

3)

The next screen, asking you to select a template is the same as the create a
mapping screen in a QBs import. You
will choose to either create a new mapping
or use an existing one just as you would in QBs

4)

You would then select all the bases used for calculating depreciation in the
particular import file. The customer must give you this info.

5)

Next screen is easy. You

will actually see the import file in the box below, you
simply have to say if there are headers and in what row the data begins.

6)

Next is the screen where you select the rows to be imported. Major thing to
watch for here is the use of the “multiple fields
” selection referred to in the
instructions on the screen. For example, if the same purchase date is going to be
used for calculating all the desired bases of depreciation, then you must select all
the bases in the little box that opens up. Same for orig
inal cost or any other
column that might contain info that could vary from one basis to another. The
customer must tell you which inputs apply to multiple bases.

7)

If you get to this mapping screen and just hit next without making any selections,
you will g
et a box that shows you the required fields on every mapping. They all
relate to input for the Federal calculation.





Once I have calculated my annual depreciation in FAM, how do I get those numbers
into QuickBooks? What if I want to record monthly dep
reciation in QuickBooks?

1)

Under the QuickBooks tab on top of the default first page, select “Post Journal
Entry to QuickBooks.”

2)

A box comes up showing the accounts involved and the last date depreciation was
recorded. You simply need to enter the new date
through which you want
depreciation recorded, for example, the current month or fiscal year
-
end date. If
the customer wants to post monthly entries, this is where he would accomplish
that, by selecting the correct month
-
end date. When you tab out of the
date field,
the entry will populate all the numbers.

3)

You need to select the basis on which you are posting depreciation in QBs.
(Most
companies will want to use the book basis for the number that shows in QBs.
Unfortunately, this monthly entry does not po
st correctly. No matter what
method/convention a customer chooses for his book basis in FAM, the entry
will post using the actual days convention. For some reason, the program
was designed this way, so it’s not a bug. Tell the customer they will have to

take the annual total, divide by the number of months in that year
-
can be
less than 12 if just purchased that year
-
in order to get a monthly number
using anything but the actual days convention.)


Thanks to Peter, we have a new question: Why don’t the n
umbers change when I
check the “switch to straight
-
line” box under the different basis columns on the
Asset view?

Apparently, that box is really only for use under the “Other” basis. For any basis besides
Other, if the customer wants to change to straight
-
line in years where that method would
give a higher number than an accelerated basis, he has to check that box and then enter
the current depreciation manually. Tabbing to the Accumulated Depreciation and
Unrecovered Basis fields below will cause them to
update to include the manual current
year entry.



My numbers look/are wrong in the FAM
. (limited support)

I can only tell you that I have manually checked the annual depreciation calculations in
FAM at least a dozen times now and have found them to be c
orrect every time, so I feel
confident in saying that, if the input is correct, the outcome will also be correct.


In some cases, customers were entering accumulated depreciation from other programs,
and that number was wrong, in one case the mapping was d
one incorrectly, in other
cases, the customer expected the depreciation for the current year to show a year
-
to
-
date
amount instead of the full year amount. We should focus on the inputs and the source of
existing info, not the calculated amount. If the c
ustomer wants the calculation checked
by hand, he/she should call his accountant.



FAM Trouble Shooting



The journal entry I am posting is out of balance and it is giving me an
error message, “The journal entry is out of balance. The debit and
credit to
tals must be equal.”



The Accumulated Depreciation account in QBooks MUST equal Prior
Depreciation in QB FAM
.



If the asset has been tracked in QB and QB FAM from the time it was acquired
this journal entry should already be in balance. If this journal does

not balance
the prior depreciation in QB FAM does not match the total in the QB account that
was set to track accumulated depreciation. A couple of reasons this may happen:

o

The asset is entered in QB FAM mid
-
life without entering previous
accumulated de
preciation from its acquisition date.

o

In QB FAM the calculated amount for prior depreciation was changed.

In both situations the solution is the same. There must be a correcting journal
entry in QBooks to bring the amount of accumulated depreciation up to

equal
prior depreciation. A good example, a computer was purchased 1/1/04 then
entered into Fixed Asset Item list and this company was using QB Pro which does
not have QB FAM. Then this file was given to the accountant in 2005 in order to
calculate asse
t depreciation. The accountant has the task of making appropriate
journal entries for this company file that reflect the assets accumulated
depreciation from last year. If the accountant launches QB FAM without first
creating the correcting journal entry
, QB FAM will read $0 as the amount of
accumulated depreciation for that asset. This inaccurate amount will cause the
QB FAM entry to be out of balance.


I am restoring my QuickBooks data file on a new computer. I open QB
FAM and select option to restore

and I get an error message “No
backup for current client exists in folder.”



Questions to ask:

o

Did you do a file>backup
in QB FAM

or was just a QBooks backup done
(.QBB)?
Note: The QBB does not contain the QB FAM client data.

o

Tell me where your backup exis
ts (for example, let’s say that they backup
their FAM clients to a CD and their CD
-
ROM drive is D: ). After
clicking browse during the restore what folder/directory do you select?

In our example above, a common mistake is to select the client folder (exam
ple:
{0000101) instead of the folder/directory above the client folder. In this case the
D:
\

is the directory that should be selected. If the clients QB FAM file is D:
\

{0000101, and the accountant selects the {0000101 this will result in an error
messag
e “No
backup for current client exists in folder
”.

o

Is this QB FAM client backup the same client file that was originally
attached to the QB company file on the other computer?

Using the Restore function QB FAM will not restore another company’s QB
FAM back
up. If the goal of the accountant is to bring in a fixed asset file that was
associated with another company file previously or was create in ProSeries FAM
then they must follow different procedures.

I am trying to transfer current year ProSeries FAM clie
nts
or attach
another company’s QB FAM client file to a different QB company file.
A
re
there any options to do this?



The FAM clients can be interchangeable; this includes ProSeries FAM clients or
any QB FAM client folders within the same year.

o

Locate the
FAM clients. Copy and paste the client folders into the QB
FAM client directory (by default that directory is C:
\
Program
Files
\
Intuit
\
QuickBooks2005
\
Components
\
FAM04
\
Clients).
Pay special
attention that the folders are copied not the individual files wit
hin them.

o

Launch QB FAM and at the four option menu select the option for
“Reconnect Accountant’s Review Copy with Fixed Asset Manager client
file”

o

Select the appropriate company name from the list.

If the four option menu does not appear and the company f
ile has already been
linked to a blank or incomplete QB FAM file, this link needs to be broken by
moving, deleting, or renaming the file within C:
\
Program
Files
\
Intuit
\
QuickBooks2005
\
Components
\
FAM04
\
Clients. This will restore the
four choice menu as outl
ined above.

When I run a depreciation report assets previously disposed of are

showing
current
depreciation
months after the disposal date in
QB
FAM.



If the report that is being run is showing Book Depreciation QB FAM
will take the depreciation for that ye
ar and divide it over the full year.
Example:
You purchase a computer for $1000.00. Estimated useful
life 5 years

with no salvage value. For financial statement purposes
you decide on

straight line depreciation. The "book depreciation" is
then is $200
.00 per year

regardless of whether or not the computer
was disposed of mid
-
year
.

o

To show the customer that QB FAM is working as designed
and not broken have them switch the basis of the report they
are creating to Federal. This will display a report with
no
additional depreciation beyond disposal date.


My QuickBooks file is on my server and when I go to another computer
and try to bring up my QB FAM it brings up old asset data or no data
just a menu.



The QB FAM Client file is not part of the QBooks data f
ile. The QB
FAM Client file is stored locally, not on the server (default location is
C:
\
Program Files
\
Intuit
\
QuickBooks
2005
\
Components
\
FAM04
\
Clients)

o

If they are seeing old, wrong, or missing assets advise them to
verify the QB FAM Client file they are
looking at. QBooks
links the QB FAM Client file with the .QBW without
prompting the user to choose a QB FAM Client. Therefore,
they or someone in their office could have inadvertently linked
this QB FAM Client to this . QBW.

o

If they see the menu with fo
ur choices upon launching QB
FAM, this means there is no QB FAM Client stored locally on
this machine that has been linked to this .QBW

o

Fix: Help the customer find the QB F
AM client files
with the
most up to date information regarding fixed assets. Hint,
usually the machine on the network that was last used for
tracking fixed assets in QB FAM
.


I restored my clients QuickBooks backup file. They do not use the
Accountants Edition. They entered fixed assets directly on the Fixed
Asset Item List, and wante
d me to use my QB FAM to calculate
depreciation and do the journal entries. After syncing with QB FAM I
noticed all of the asset numbers and descriptions were erased; replaced
with QB FAM’s own list number and a copy of my description.



QB FAM will overwri
te the “Asset Name/Number” field in QBooks
with “Purchase Description” plus the QB FAM asset list number.
This is not changeable after the sync. The link between QBooks and
QB FAM is working as designed.

o

Usually this happens when an accountant receives a

backup
copy of the clients data, therefore in extreme case with
hundreds of asset have been renamed with QB FAMs own
naming convention then restoring the original backup is the
only answer short of manually changing the assets in QB FAM.

o

To prevent this f
rom happening in the future have the customer
use the “Purchase Description” field with the needed detail.
Example: Customer has three IBM laptops. They are tracked
with”

“IBM laptop


1001”, “IBM laptop


1002” and “IBM
laptop


1003”. If those descri
ptions/numbers were placed in
the “Asset Name/Number” field in the fixed asset item list they
would be overwritten with whatever is in the “Purchase
Description” field. If detail like , “IBM laptop


1001” is
necessary this needs to be entered into the “P
urchase
Description” field.

Can I use the custom reports that I created in ProSeries FAM in QB
FAM?



Yes they can. The two FAM programs share the same base code and
can swap Client files, report templates, Excel Import mappings (csv),
etc.

o

In order to swap

these components the biggest challenge is
locating the directories these programs reside (then copy and
paste). Default directories are as follows:

Component

QB FAM

ProSeries FAM

Reports

C:
\
Program
Files
\
Intuit
\
QuickBooks
2005
\
Components
\
FAM04
\
Reports

C
:
\
Famwin04
\
REPORTS

Clients

C:
\
Program
Files
\
Intuit
\
QuickBooks
2005
\
Components
\
FAM04
\
Clients

C:
\
Famwin04
\
CLIENTS

CSV
Mappings
(displayed as
*.FIM in
Windows
Explorer)

C:
\
Program
Files
\
Intuit
\
QuickBooks
2005
\
Components
\
FAM04
\
import

C:
\
Famwin04
\
Import




W
here are my QB FAM clients located on my H
ard
D
rive
?



The default QB FAM Client file location is

C:
\
Program
Files
\
Intuit
\
QuickBooks 2005
\
Components
\
FAM04
\
Clients


I’m trying to export my fixed asset data into ProSeries getting error
“There are no ProSeries
Tax clients for this Tax Return Type”



Verify that the “Income Tax Form Used” In QBooks
Company>Company Info… is set correctly.



The most common cause is not the “Income Tax Form Used” , but is
the version of QB FAM.

QuickBooks version

Bundled QB FAM

Tax Ye
ar/File
Extension Needed

QB Acct Ed 2004

QB Enterprise 4.0

QB FAM 2003

ProSeries Tax 2003



1040 (.03I)



1120 (.03C)



1120S (.03S)



1065 (.03P)



990 (.03N)

QB Acct Ed 2005

QB Enterprise 5.0

QB FAM 2004

ProSeries Tax 2004



1040 (.04I)



1120 (.04C)



1120S (.04S)



10
65 (.04P)



990 (.04N)

When File>Export>ProSeries Tax>Export… is selected in QB FAM, the
corresponding ProSeries file extension must be present in order for the menu
of available ProSeries Tax Clients to appear. Otherwise “There are no
ProSeries Tax client
s for this Tax Return Type” error will prevent the
export.

Note: QB FAM 2003 can track assets for any year (including 2007
sample companies) however for the export to ProSeries Tax program the
corresponding QB FAM program must be installed.


My FAM is no
t calculating my depreciation correctly.

This is a common call concerning QB FAM. Though the causes can be too
numerous to list, the following is a guide to troubleshooting this type of call.



What depreciation numbers are you expecting to see?

o

Customer ca
lculated the numbers manually.

o

Customer used another depreciation program

o

Previous experience with this type of asset in QB FAM

-

Are the depreciation numbers that are wrong on a report or journal
entry?

o

If it is on a report check the lower half of the Asset

Tab:



Date Placed in Service


The date the asset is purchased
not inputted

into QB FAM



Cost or Basis


Make sure this value matches purchase
price



Tax System


Have customer verify if this is the tax
system used for their calculations



Depreciation Method
-

Have customer verify if this is the
depreciation method used for their calculations



Recovery Period
-

Have customer verify if this is the
correct recovery period used for their calculations


o

If the depreciation in the journal entry is not what they expec
t to
see:

o

Check the “Depreciation Through” date

o

Is the prior depreciation correct?

o

The Accumulated Depreciation account in QBooks MUST equal
Prior Depreciation in QB FAM.

If not, this indicates:



They changed the prior depreciation figures



They did not trac
k this asset’s entire life’s depreciation in
QB FAM



Assigned the wrong accumulated depreciation
account in QB FAM


Prior depreciation is showing 0.00 and is grayed out.



Prior depreciation will be 0.00 if the Date Placed in service is set to
the current yea
r in QB FAM. If the customer needs to enter prior
depreciation, you know they incorrectly entered the date placed in
service as current year.
(Note
: C
urrent year is displayed in the lower
right hand corner of QB FAM after the Num lock indicator)




An ac
countant calls and says, “
My client sent me his company file, and
when I go into QB FAM I see all the assets but the general ledger
accounts didn’t come over?





This is an indication that the accountant never received the QB FAM
client folder with the QBB.

As a result, when launching the QB Fixed
Asset Manager, the four choice menu will come up, as if the QBW
file had never been associated with a QB FAM file. Usually the
accountant chooses “create new…” and proceeds through the new
client wizard. The end

result will be a QB FAM to QuickBooks
“syncing” that will bring over the asset information on the Fixed
Asset Item list but in reality is not the “real” QB FAM client file.
That “real” FAM file still resides on the accountants’ client’s machine
and DID N
OT get bundled with the QBB backup file.