Last updated on May 29, 2024.
Managing your fixed assets can feel overwhelming at times, but a streamlined process is crucial to understanding how the value of your assets changes over time.
This blog post covers the basics of fixed asset roll forward and construction in progress (CIP) processes and how to easily create these reports in NetSuite with NetAsset.
Let’s start with some definitions.
What does "roll forward" mean in accounting?
Roll forward is the process of updating the balances of a financial statement or report to reflect the changes that occurred during a subsequent period.
It provides a clear picture of the activity of the fixed assets over time and is also used in audit procedures to verify the accuracy of financial statements by taking the prior year balances and adding on current year transactions to get to the end-of-year balance.
What is an example of a roll forward?
Let’s take go over an example of a balance sheet roll forward that shows the changes in the balance sheet accounts from one period to the next.
Say you have a balance sheet as of December 31, 2023, and you want to create a roll forward for the accounts receivable balance on January 31, 2024.
You would take the accounts receivable balance as of December 31, 2023, and add any new sales invoices created in January 2024. You would then subtract any payments received in January 2024 from customers for outstanding invoices as of December 31, 2023. The resulting total would be the accounts receivable balance as of January 31, 2024.
For a visual example, the screenshot below shows a simple accounts receivable register roll forward from January 1, 2024 to May 31, 2024.
What is an asset roll forward report?
An asset roll forward report is a financial statement that shows the changes in an asset account over a specific period. The report provides a detailed record of the asset's opening balance, additions, disposals, and closing balance for a particular period (typically a month, quarter, or year).
What is CIP capitalization?
Construction in progress (CIP) and work in progress (WIP) refer to the cost of a project that isn’t finished yet. CIP capitalization refers to how you track these projects on your balance sheet. Instead of treating the related expenses (like the project’s labor, materials, and equipment) as an immediate expense, CIP capitalization allows you to spread the cost over the useful life of the asset.
How to simplify roll forward and CIP reports with NetAsset
Now that we’ve gone over definitions, let’s look at how you can simplify these processes in NetSuite.
NetAsset is an advanced fixed asset management solution built 100% on the NetSuite platform. If your company is managing its fixed assets in Excel or another software solution, switching to NetAsset can reduce risk, save time, and help increase your bottom line.
I’m going to discuss three of my favorite NetAsset features: advanced reporting, the CIP capitalization process, and the intuitive and flexible user experience.
Advanced reporting
Having been a Big 4 auditor in my previous life (still recovering), I have seen how many iterations it takes to develop an accurate fixed asset roll forward. I would go back and forth with my clients multiple times until we finally felt comfortable with their reports.
On the surface, the fixed asset roll forward does not appear difficult. However, there can be thousands or even hundreds of thousands of moving pieces, which make the report very time-consuming and prone to error.
What if you could have your accounting software generate this report for you? That would save a lot of time, right?
NetAsset provides an out-of-the-box fixed asset roll forward report that is systematically generated so neither you nor your auditors need worry about its accuracy. You can also filter using native NetSuite segments and the time range you would like to see.
The report has full drill-down capabilities. Data can be summarized by asset class or expanded to display individual asset detail, which you can export to Excel and send to the auditors.
NetAsset was built by accountants who understand the reports that you need. That’s why it also provides depreciation waterfall reports to help with forecasting, reconciliation reports to help with month end, and financial/subledger reports to help with internal and external reporting.
In the screenshots below, you can see an example of 1) the full asset roll forward report and 2) the report zoomed in on asset type.
CIP capitalization process
If your company has CIP/WIP and you are on NetSuite, my guess is you have run into challenges. NetAsset provides a platform to aggregate and capitalize CIP in one easy step.
Let’s say your company is building a storage garage. You book 15 invoices for the parts and labor to CIP related to this project. In NetAsset, you can simply filter for this project, select the 15 transactions (vendor bill, journal entries, etc.), then capitalize the asset. The system gives you the option to create 15 separate assets or one single asset.
In our example, we are building a garage, so we would capitalize into one single asset. Once the asset is capitalized, each of those 15 transactions will be permanently linked to a single asset record.
Capitalizing assets from CIP has never been this easy in NetSuite. You are now ready to place the asset in service and start depreciating.
In the screenshots below, you can see 1) the NetAsset CIP account interface and 2) related source transaction details on the asset record.
Intuitive and flexible user experience
NetAsset is built 100% on the NetSuite platform by developers who know NetSuite as well as anyone. This gives the product a completely native feel. If you use NetSuite, you will have no problem using NetAsset.
From robust suitelets to straightforward asset capitalization, booking journal entries, and reporting, automation allows you to get the job done efficiently without the headache.
NetAsset leverages out-of-the-box records and reports, which you can customize and configure to your liking. You have specific asset management requirements such as tracking rentable square footage or insurance requirements? No problem. Simply add the custom field onto the asset record. You can then add and report on any fields that would help you meet your reporting and asset management needs. This flexibility makes this SuiteApp feel like it is a fixed asset subledger solution designed specifically for you and your business.
Manage your fixed assets with NetAsset
NetAsset offers all the features you need for managing fixed assets, helping you reduce risk, save time, and increase your bottom line. Plus, it can help you increase the return on investment of your NetSuite instance.
With its intuitive and flexible user experience, you can navigate seamlessly around the software—from creating assets with our CIP capitalization process, to accessing our advanced reports including the fixed asset roll forward report. Want to see it action? Request a demo to get started.
Fixed asset roll forward FAQs
What is the purpose of a roll forward in accounting?
The purpose of a roll forward in accounting is to track changes in account balances over time and ensure that all financial transactions are accurately reflected in financial statements. It also identifies discrepancies or errors in financial records and provides a clear and accurate picture of an organization's financial activity over time.
This helps the organization make informed business decisions and helps auditors ascertain that financial statements are accurate.
What are the journal entries for fixed assets?
Different journal entries are used to record the purchase and any changes in the value of a fixed asset. For example, the initial purchase of a fixed asset is recorded by debiting a CIP or fixed asset clearing account and crediting either the cash or accounts payable account. Then the asset is capitalized by crediting the fixed asset account and debiting a CIP or fixed asset clearing account.
Over time, as the asset continues throughout its useful life or becomes impaired, additional journal entries may be required to adjust the value of the asset, such as depreciation, revaluation, transfers, and disposals.
What does 12 months rolling mean?
The term "12 months rolling" refers to a method of tracking and analyzing data over a period that moves forward by 12 months at the end of each month.
This means that at any given point in time, the data being analyzed includes the most recent 12-month period. As time passes, the oldest month's data is dropped and replaced with data from the current month.
