One of the difficult parts of an accountant’s job is to deal with the endless regulations around asset evaluation and, more specifically, long term assets. Long term assets, also known as fixed assets, are the assets that are not easily converted into ca$h. This specific area of accounting is so tightly regulated because of the effect it has, both positive and negative, on your company’s performance. For large companies, it is usually preferable to depreciate an asset over a ridiculous amount of time because it minimizes the expenses for any given year and seems to increase the profit margin. This is contrary to smaller companies, which usually get more tax breaks for bigger expenses due to their size. This is where the NetSuite Fixed Assets Management (FAM) module comes in to play; by setting up your various rules for the asset types, it automatically creates your journal entry for each period.
So now that you know can rid yourself of the tedious task of manually depreciating all these fixed assets, you probably want to know how to acquire the FAM. First, you contact you favorite NetSuite Partner (ERP Guru) to purchase the bundle. Secondly, after enabling Custom Records and Server SuiteScript, you navigate to Setup > Customization > Install Bundle. Finally, you look into the production account TSTDRV820683 and install the bundle 14052. Et voilà, you now have the FAM module (and, as an added bonus you don’t have to manually update it because it is automatically managed by NetSuite!).
The setup of the module is done in three simple steps. The first step is to setup your accounts in the chart of account (COA). Once the bundle installed, a new account type, "Fixed Asset", is enabled in the COA. There is a need to setup accounts for assets, depreciation, depreciation charges, write downs, write offs and disposal accounts. You must also create an asset transfer account if you are in a OneWorld instance. The second step is to create depreciation methods. The bundle comes with some default methods that are most common, but it also allows you to create any method needed.The third and final step is to setup the asset types. This is where the entire accounting rules are setup. Each asset type is subject to different depreciation methods and lengths.
You now have turned a long and tedious accounting task into a simple process that can depreciate any type of assets with a couple of clicks!