This blog post illustrates how you can use the Dynamics AX project module to track the costs of constructions in progress and transfer those costs later on to a fixed asset once the construction is finished.
Before you are able to track the costs of your construction in progress you have to ensure that an investment project group is setup that accumulates all costs on balance sheet accounts as illustrated in the next screen-print.
Once your investment project group is setup, you need to create an Investment project…
… that you use for recording all construction costs. In my case, I recorded hour, expense and item costs that add up to a total of 17300 EUR as shown in the next screenshot.
Once your construction project is finished and provided that all costs have been recorded on your project, you can transfer those costs to a fixed asset by using the estimate function.
The first step required in the estimate form is creating an estimate that accumulates all costs recorded. This can be done by selecting the “set cost to complete zero” cost to complete method.
After the estimate is created you can identify the total costs accumulated in the WIP tab of the estimate form. Example:
The next steps required are (a) specifying the fixed asset to which you want to transfer all costs and (b) posting the estimate.
Please note that posting the estimate does not create any ledger transaction and does not transfer any costs to the fixed asset selected. To do the actual transfer of the costs to the fixed asset, you need to eliminate the posted estimate by using the corresponding functionality.
After the elimination is done, you can identify the costs on the fixed asset selected before.
In the example used, the construction started and finished within a single month. If you are working on long-term construction projects and want to update your “construction in progress” fixed asset in the fixed asset module you need to:
- Post the additional costs that arise in the following months as usual,
- Reverse the elimination recorded previously,
- Create and post and additional estimate,
- Eliminate the estimate.
Those steps need to be repeated every month as long as your project runs.
An alternative to reversing and repeating eliminations recorded before, you can separate your investment project into subprojects that are eliminated successively as the construction progresses.
If you are eliminating your construction projects on a regular basis, those costs are included in your fixed asset module and thus in your fixed asset statement.
If, on the other hand, you are not eliminating your project construction costs on a regular basis, all costs are accumulated in WIP (balance sheet) accounts only and are not included in the standard Dynamics AX fixed asset statement. In order to get your fixed asset statement right, you thus need to include the WIP accounts in your fixed asset statement which requires that you either use the Management Reporter for your fixed asset statement (see the previous post) or that implement a system adjustment.
If you are transferring all construction costs initially to a “in construction” fixed asset, you can move all costs from this “in construction” fixed asset to an ordinary fixed asset by using the standard AX fixed asset reclassification functionality. Example:
The following screenshots provide you some additional information on the fixed asset posting profile setup used for the examples illustrated in the blog posts. Please not that separate ledger accounts are used for each combination consisting of (a) the fixed asset transaction type, (b) the fixed asset group and (c) the value model.
Please note that the sales disposal parameters illustrated in the following screenshot could be setup in more detail. Yet, the major point that I want to make here is that the ledger accounts that are setup in this section differ from the ones used for recording the original fixed asset transaction. As an example, fixed asset acquisitions are recorded on ledger account 180500, while the offset transaction that is recorded when the fixed asset is sold is recorded on ledger account 180502.