Learn the best practices for disposing of fixed assets in Dynamics 365 Finance using free text invoices. Discover how to ensure accurate financial reporting by adjusting accumulated depreciation and recording surplus or loss correctly.
Table of Contents
Question
Your company, Contoso Ltd., is in the process of disposing of several fixed assets using free text invoices. The assets have varying depreciation methods. They have been partially depreciated over their useful life. You need to ensure that the disposal process is accurately reflected in the financial statements, adhering to the local legislation and accounting principles.. What are two ways to achieve this goal? Each correct answer presents part of thea complete solution. Choose two.
A. Ensure that the free text invoice for the disposal includes the correct main account for the fixed asset and records any surplus or loss from the disposal.
B. Postpone the disposal until the next fiscal year to simplify the depreciation calculations for the current year.
C. Review and adjust the accumulated depreciation on the fixed assets to reflect the correct net book value prior to disposal.
D. Use a standard cost inventory model for the fixed assets to streamline the disposal process regardless of the depreciation method used.
Answer
A. Ensure that the free text invoice for the disposal includes the correct main account for the fixed asset and records any surplus or loss from the disposal.
C. Review and adjust the accumulated depreciation on the fixed assets to reflect the correct net book value prior to disposal.
Explanation
Reviewing and adjusting the accumulated depreciation ensures that the net book value is accurate, which is necessary for correct financial reporting upon disposal. Including the correct main account in the free text invoice ensures that any gains or losses from the disposal are properly recorded, which is also essential for accurate financial statements. Postponing the disposal does not address the immediate need to reflect the disposal accurately and may not comply with local legislation. Using a standard cost inventory model is not relevant to the disposal of fixed assets, as it pertains to inventory valuation rather than fixed asset disposal.
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