Asset Capitalization
Overview
Asset Capitalization — Business Overview
Asset Capitalization is a business document used in Dafater to formally convert costs into a fixed asset that can be tracked, depreciated, and reported on in financial statements. It represents the point at which spending on equipment, machinery, property, or other long-term items is recognized as a company asset rather than an expense.
What Asset Capitalization Is Used For
Asset Capitalization is used to: - Combine one or more costs (such as purchases, installation, or improvement expenses) into a single fixed asset - Establish the official value of an asset for accounting and reporting purposes - Start depreciation and asset lifecycle tracking - Ensure compliance with accounting and audit requirements
In simple terms, it marks the moment when an investment becomes a usable, reportable business asset.
Prerequisites and Setup Requirements
Before using Asset Capitalization, the following should typically be in place:
- Defined asset categories to classify assets correctly (e.g., machinery, vehicles, IT equipment)
- Recorded expenses or purchases related to the asset (such as supplier invoices or internal costs)
- Clear capitalization policy, including thresholds and rules for what qualifies as a capital asset
- Accounting periods that are open and approved for posting
These ensure that asset values are accurate and aligned with company policy.
Typical Workflow and Business Process Fit
Costs are incurred
The business purchases or spends money on items intended to become a long-term asset.Costs are reviewed
Finance or asset managers confirm the costs meet capitalization criteria.Asset Capitalization is created
Relevant costs are grouped together and assigned to an asset record using Asset Capitalization.Asset value is established
The total capitalized amount becomes the asset’s initial value.Asset lifecycle begins
The asset can now be depreciated, insured, transferred, or disposed of as part of standard asset management.
This process ensures a clean transition from spending to asset ownership.
Key Business Scenarios Where Asset Capitalization Is Essential
- Purchasing large equipment or machinery that requires installation or additional setup costs
- Constructing or developing assets internally, where costs accumulate over time
- Upgrading or enhancing existing assets in a way that increases their value or useful life
- Regulatory or audit compliance, where clear documentation of asset value is required
- Accurate financial reporting, especially for balance sheets and depreciation schedules
Important Considerations for Users
- Only capitalize costs that meet your organization’s capitalization policy
- Ensure all related costs are included to avoid understating asset value
- Verify dates carefully, as capitalization timing affects depreciation and financial results
- Review approvals before finalizing, as changes after capitalization can be limited
- Maintain proper documentation to support audits and financial reviews
In Summary
Asset Capitalization in Dafater is a critical business document that transforms spending into structured, trackable assets. It supports financial accuracy, operational clarity, and long-term asset management by ensuring every major investment is properly recognized and managed throughout its lifecycle.
Basic Information
- Module: Assets
- Document Type: Document
Fields
| Field Name | Label | Type | Required | Options | Description |
|---|---|---|---|---|---|
| title | Title | Data | - | Short reference title for the asset capitalization transaction | |
| naming_series | Series | Select | ✓ | ACC-ASC-.YYYY.- | Auto-generated numbering pattern for asset capitalization records |
| capitalization_method | Capitalization Method | Select | , Create a new composite asset, Choose a WIP co... | Method used to create or update the capitalized asset | |
| targetitemcode | Target Item Code | Link | Item | Item code representing the resulting capitalized asset | |
| targetitemname | Target Item Name | Data | - | Item name of the resulting capitalized asset | |
| target_asset | Target Asset | Link | Asset | Existing asset selected for capitalization or value enhancement | |
| targetassetname | Asset Name | Data | - | Name of the target asset after capitalization | |
| target_qty | Target Qty | Float | - | Quantity of the asset being capitalized | |
| targetassetlocation | Target Asset Location | Link | Location | Physical or logical location of the target asset | |
| company | Company | Link | ✓ | Company | Company under which the asset capitalization is recorded |
| posting_date | Posting Date | Date | ✓ | - | Accounting date for capitalization posting in Dafater |
| posting_time | Posting Time | Time | ✓ | - | Exact time of the capitalization posting |
| setpostingtime | Edit Posting Date and Time | Check | - | Allow manual adjustment of posting date and time | |
| finance_book | Finance Book | Link | Finance Book | Finance book used for asset valuation and depreciation | |
| targetbatchno | Target Batch No | Link | Batch | Batch number assigned to the capitalized asset | |
| targetserialno | Target Serial No | Small Text | - | Serial numbers linked to the capitalized asset | |
| amended_from | Amended From | Link | Asset Capitalization | Reference to the original asset capitalization document | |
| targetisfixed_asset | Target Is Fixed Asset | Check | - | Indicates whether the target item is a fixed asset | |
| targethasbatch_no | Target Has Batch No | Check | - | Specifies if the target asset requires batch tracking | |
| targethasserial_no | Target Has Serial No | Check | - | Specifies if the target asset requires serial tracking | |
| stock_items | Stock Items | Table | Asset Capitalization Stock Item | Stock items consumed during asset capitalization process | |
| stockitemstotal | Consumed Stock Total Value | Currency | Company:company:default_currency | Total value of stock items consumed | |
| asset_items | Assets | Table | Asset Capitalization Asset Item | Existing assets consumed or merged during capitalization | |
| assetitemstotal | Consumed Asset Total Value | Currency | Company:company:default_currency | Total value of assets consumed | |
| service_items | Services | Table | Asset Capitalization Service Item | Service expenses capitalized into the asset value | |
| serviceitemstotal | Service Expense Total Amount | Currency | Company:company:default_currency | Total service expense amount capitalized | |
| total_value | Total Value | Currency | Company:company:default_currency | Final total value of the capitalized asset | |
| targetincomingrate | Target Incoming Rate | Currency | Company:company:default_currency | Calculated rate per unit of the capitalized asset | |
| cost_center | Cost Center | Link | Cost Center | Cost center associated with the capitalization expense | |
| targetfixedasset_account | Target Fixed Asset Account | Link | Account | Fixed asset account used for capitalization posting |
Child Tables
Stock Items (Asset Capitalization Stock Item)
| Field Name | Label | Type | Required | Options | Description |
|---|---|---|---|---|---|
| item_code | Item Code | Link | ✓ | Item | Stock item identifier selected for capitalization |
| item_name | Item Name | Data | - | Item description for capitalization record | |
| warehouse | Warehouse | Link | ✓ | Warehouse | Warehouse where item is stored before capitalization |
| purchasereceiptitem | Purchase Receipt Item | Data | - | Reference to related purchase receipt line | |
| stock_qty | Quantity | Float | - | Quantity of item to be capitalized | |
| actual_qty | Actual Qty in Warehouse | Float | - | Current available quantity in selected warehouse | |
| valuation_rate | Valuation Rate | Currency | Company:company:default_currency | Per unit valuation rate for capitalization | |
| amount | Amount | Currency | Company:company:default_currency | Total capitalization value based on quantity and rate | |
| stock_uom | Stock UOM | Link | ✓ | UOM | Unit of measure for stock quantity |
| serialandbatch_bundle | Serial and Batch Bundle | Link | Serial and Batch Bundle | Grouped serial and batch details for this item | |
| useserialbatch_fields | Use Serial No / Batch Fields | Check | - | Enable serial or batch tracking for the item | |
| serial_no | Serial No | Text | - | Serial numbers associated with the capitalized item | |
| batch_no | Batch No | Link | Batch | Batch number linked to the capitalized item | |
| cost_center | Cost Center | Link | Cost Center | Cost center charged for the capitalized asset |
Assets (Asset Capitalization Asset Item)
| Field Name | Label | Type | Required | Options | Description |
|---|---|---|---|---|---|
| asset | Asset | Link | ✓ | Asset | Linked Dafater asset being capitalized |
| asset_name | Asset Name | Data | - | Descriptive name of the asset | |
| finance_book | Finance Book | Link | Finance Book | Applicable finance book for capitalization | |
| item_code | Item Code | Link | ✓ | Item | Source item used to create the asset |
| item_name | Item Name | Data | - | Name of the source item | |
| currentassetvalue | Current Asset Value | Currency | Company:company:default_currency | Current book value before capitalization | |
| asset_value | Asset Value | Currency | Company:company:default_currency | Capitalized value added to the asset | |
| cost_center | Cost Center | Link | Cost Center | Cost center charged for capitalization value | |
| fixedassetaccount | Fixed Asset Account | Link | Account | General ledger account for fixed asset capitalization |
Services (Asset Capitalization Service Item)
| Field Name | Label | Type | Required | Options | Description |
|---|---|---|---|---|---|
| item_code | Item Code | Link | Item | Service item linked for capitalization in Dafater assets. | |
| item_name | Item Name | Data | - | Descriptive name of the service item being capitalized. | |
| expense_account | Expense Account | Link | ✓ | Account | Account charged for service cost before asset capitalization. |
| qty | Qty | Float | - | Quantity of service units applied to the asset. | |
| uom | UOM | Link | UOM | Unit of measure for the service quantity. | |
| rate | Rate | Currency | Company:company:default_currency | Cost per unit used to calculate capitalization value. | |
| amount | Amount | Currency | Company:company:default_currency | Total service cost capitalized into the asset value. | |
| cost_center | Cost Center | Link | Cost Center | Cost center allocating the service expense for capitalization. |
Permissions
| Role | Read | Write | Create | Delete | Submit | Cancel |
|---|---|---|---|---|---|---|
| Quality Manager | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Manufacturing Manager | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
Related DocTypes
| DocType | Relationship | Module |
|---|---|---|
| Account | Links to | Accounts |
| Asset | Links to | Assets |
| Asset Capitalization | Links to | Assets |
| Batch | Links to | Stock |
| Company | Links to | Setup |
| Cost Center | Links to | Accounts |
| Finance Book | Links to | Accounts |
| Item | Links to | Stock |
| Location | Links to | Assets |