NetSuite Setup Requirements
Required features, modules, and configuration for fixed asset management functionality.
Fixed Assets Management (FAM) is a separately licensed NetSuite module. Contact your NetSuite account manager for pricing and enablement.
Required Features
| Feature | Location | Purpose |
|---|---|---|
| Fixed Assets Management | Accounting subtab | Core fixed asset tracking and depreciation |
| Alternate Depreciation Methods | FAM preferences | Enables tax vs GAAP dual book depreciation |
| Multi-Book Accounting | Accounting subtab | Required for dual GAAP/Tax depreciation books |
Key Navigation Paths
| Task | Navigation Path |
|---|---|
| Asset Types | Fixed Assets → Setup → Asset Types |
| Depreciation Methods | Fixed Assets → Setup → Depreciation Methods |
| Asset Records | Fixed Assets → Assets → Asset List |
| Create Asset | Fixed Assets → Assets → New Asset |
| FAM Accounts | Lists → Accounting → Accounts (filter: Show in FAM = Yes) |
| Run Depreciation | Fixed Assets → Processing → Calculate Depreciation |
| Asset Proposals | Fixed Assets → Processing → Asset Proposals |
| Dispose Asset | Fixed Assets → Processing → Dispose Asset |
| FAM Preferences | Setup → Accounting → Fixed Assets Preferences |
Account Configuration
| Account | Type | Show in FAM Field |
|---|---|---|
| Fixed Asset - Machinery | Fixed Asset | Yes |
| Accumulated Depreciation | Fixed Asset (Contra) | Yes |
| Depreciation Expense | Expense | Yes |
| Gain/Loss on Disposal | Other Income/Expense | Yes |
Accounts must have "Show in Fixed Assets Management" = Yes to appear in FAM dropdowns. Set this at Lists → Accounting → Accounts → [Edit Account] → FAM checkbox.
SuiteAnswers References
| Topic | Article ID | Title |
|---|---|---|
| Overview | 43251 | Fixed Assets Management Overview |
| Setup | 44832 | Setting Up Fixed Assets Management |
| Depreciation | 43298 | Depreciation Methods in FAM |
| Dual Book | 48721 | GAAP vs Tax Depreciation Books |
| Disposal | 44856 | Asset Disposal and Sale |
| Import | 45123 | Importing Assets via CSV |
Depreciation Methods Available
| Method | Internal ID | Common Use |
|---|---|---|
| Straight Line | straightline | GAAP book (most common) |
| Declining Balance | decliningbalance | Accelerated depreciation |
| Double Declining | doubledeclining | 200% declining balance |
| MACRS | macrs | US Tax book |
| Sum of Years Digits | sumofyears | Accelerated alternative |
| Units of Production | unitsofproduction | Usage-based depreciation |
Scenario Overview
TechMfg Inc. purchases a CNC machining center for their manufacturing facility. This example tracks the complete lifecycle from purchase through disposal 7 years later.
This example uses NetSuite's Fixed Assets Management module, which provides multi-book depreciation support (GAAP, Tax, IFRS), asset tracking, and automated depreciation schedules. FAM must be enabled and configured before use.
Asset Configuration
| Attribute | GAAP Book | Tax Book |
|---|---|---|
| Asset Cost | $150,000.00 | $150,000.00 |
| Salvage Value | $10,000.00 | $0.00 |
| Depreciable Base | $140,000.00 | $150,000.00 |
| Useful Life | 7 years | 5 years (MACRS) |
| Method | Straight-Line | 200% Declining Balance |
| Annual Depreciation | $20,000.00 | Varies (MACRS) |
Always configure both GAAP and Tax books for fixed assets, even if the company doesn't currently need separate treatments. Differences between book and tax depreciation create deferred tax assets/liabilities that auditors will expect to see tracked properly.
Asset Acquisition
TechMfg purchases the CNC machine from Industrial Equipment Co. for $150,000, which includes delivery and installation costs.
| Item | Description | Amount |
|---|---|---|
| CNC Machining Center | Model XR-5000, S/N: CNC2020-0042 | $142,000.00 |
| Delivery & Rigging | Freight and installation | $5,500.00 |
| Electrical Setup | 480V connection installation | $2,500.00 |
| Total Capitalized Cost | $150,000.00 | |
Ensure costs are properly capitalized vs. expensed based on company policy. Common thresholds range from $1,000 to $5,000. Installation, delivery, and setup costs that are necessary to bring the asset to working condition should be capitalized.
Create Fixed Asset Record
Monthly Depreciation
Depreciation is calculated and posted monthly for both GAAP and Tax books. The first partial month is prorated based on the mid-month convention.
Depreciation Schedule - GAAP Book
| Year | Beginning NBV | Depreciation | Accum Depr | Ending NBV |
|---|---|---|---|---|
| 2020 | $150,000.00 | $19,166.67 | $19,166.67 | $130,833.33 |
| 2021 | $130,833.33 | $20,000.00 | $39,166.67 | $110,833.33 |
| 2022 | $110,833.33 | $20,000.00 | $59,166.67 | $90,833.33 |
| 2023 | $90,833.33 | $20,000.00 | $79,166.67 | $70,833.33 |
| 2024 | $70,833.33 | $20,000.00 | $99,166.67 | $50,833.33 |
| 2025 | $50,833.33 | $20,000.00 | $119,166.67 | $30,833.33 |
| 2026 | $30,833.33 | $20,000.00 | $139,166.67 | $10,833.33 |
| 2027 | $10,833.33 | $833.33 | $140,000.00 | $10,000.00 |
Year 1 Depreciation Progress
Capital Improvement
In June 2022, TechMfg upgrades the CNC machine with a new high-speed spindle that extends the asset's useful life and increases production capacity.
Expenditure] --> B{Capitalization
Test} B -->|Extends Life| C[Capitalize &
Depreciate] B -->|Adds Capacity| C B -->|Repairs Only| D[Expense
Immediately] C --> E[Adjust
Depreciation] E --> F{Method} F --> G[Prospective:
New Schedule] F --> H[New Asset:
Separate Record] style A fill:#8b5cf6,stroke:#7c3aed,color:#fff style B fill:#fef3c7,stroke:#f59e0b,color:#1a1a1a style C fill:#22c55e,stroke:#16a34a,color:#fff style D fill:#ef4444,stroke:#dc2626,color:#fff style E fill:#3b82f6,stroke:#2563eb,color:#fff style F fill:#fef3c7,stroke:#f59e0b,color:#1a1a1a style G fill:#10b981,stroke:#059669,color:#fff style H fill:#10b981,stroke:#059669,color:#fff
| Item | Description | Amount |
|---|---|---|
| High-Speed Spindle | 30,000 RPM upgrade kit | $22,000.00 |
| Installation Labor | Technician service (16 hrs) | $3,000.00 |
| Total Improvement Cost | $25,000.00 | |
This improvement meets capitalization criteria because it (1) extends the useful life of the asset and (2) increases production capacity. The cost is added to the asset's basis and depreciated over the remaining useful life.
Revised Depreciation Schedule (Post-Improvement)
For GAAP, improvements are typically added to the existing asset and depreciated prospectively over the remaining (or extended) life. For tax purposes, improvements are often treated as separate MACRS assets. Document the business justification for life extension to support audit inquiries.
Asset Impairment
In December 2024, due to a technology shift in the industry, management determines the CNC machine's recoverable amount is less than its carrying value and records an impairment.
Trigger] --> B[Impairment
Test] B --> C{Carrying Value vs
Recoverable Amount} C -->|CV > RA| D[Record
Impairment Loss] C -->|CV ≤ RA| E[No Impairment
Required] D --> F[Reduce Asset
Carrying Value] F --> G[Adjust Future
Depreciation] style A fill:#ef4444,stroke:#dc2626,color:#fff style B fill:#f59e0b,stroke:#d97706,color:#1a1a1a style C fill:#fef3c7,stroke:#f59e0b,color:#1a1a1a style D fill:#ef4444,stroke:#dc2626,color:#fff style E fill:#22c55e,stroke:#16a34a,color:#fff style F fill:#dc2626,stroke:#b91c1c,color:#fff style G fill:#3b82f6,stroke:#2563eb,color:#fff
The impairment creates a temporary book-tax difference. For GAAP, the new carrying value is $52,000. For tax, the basis remains at $25,000. This difference reverses when the asset is disposed. Track this in your deferred tax calculation.
Post-Impairment Status
Asset Transfer
In March 2025, the CNC machine is transferred from the main plant to a satellite facility. This requires updating the asset's location and potentially its cost center.
When transferring between cost centers within the same legal entity, the GL accounts typically don't change - only the segment values (department, location) are updated. For transfers between subsidiaries (intercompany), see Appendix S for the full accounting treatment.
Configure FAM transfer workflows to require approval and automatically update both the asset record and GL segments. Consider whether depreciation allocation should change based on the new cost center's budget or if historical allocations should be preserved.
Asset Disposal (Sale)
In December 2026, TechMfg sells the CNC machine to a used equipment dealer for $18,000. The sale results in a gain on disposal.
Decision] --> B{Disposal
Type} B -->|Sale| C[Record
Sale Price] B -->|Retirement| D[Scrap Value
or Zero] B -->|Trade-In| E[Fair Value
Exchange] C --> F[Remove Asset
from Books] D --> F E --> F F --> G[Calculate
Gain/Loss] G --> H[Update
FAM Record] style A fill:#ef4444,stroke:#dc2626,color:#fff style B fill:#fef3c7,stroke:#f59e0b,color:#1a1a1a style C fill:#22c55e,stroke:#16a34a,color:#fff style D fill:#6b7280,stroke:#4b5563,color:#fff style E fill:#8b5cf6,stroke:#7c3aed,color:#fff style F fill:#3b82f6,stroke:#2563eb,color:#fff style G fill:#f59e0b,stroke:#d97706,color:#1a1a1a style H fill:#10b981,stroke:#059669,color:#fff
For tax purposes, the $18,000 gain is treated as ordinary income under IRC §1245 depreciation recapture rules, not capital gain. This is because the gain is less than the total depreciation previously claimed ($175,000). Ensure tax provision reflects this.
Complete Lifecycle Summary
Review of the complete CNC Machine lifecycle from acquisition in 2020 through disposal in 2026, including all GL impacts.
Asset Lifecycle Timeline
| Date | Event | Amount | GAAP NBV |
|---|---|---|---|
| Jan 15, 2020 | Acquisition | $150,000.00 | $150,000.00 |
| Dec 31, 2020 | Year 1 Depreciation | ($19,166.67) | $130,833.33 |
| Dec 31, 2021 | Year 2 Depreciation | ($20,000.00) | $110,833.33 |
| Jun 10, 2022 | Capital Improvement | $25,000.00 | $125,833.33 |
| Dec 31, 2022 | Year 3 Depreciation | ($20,976.00) | $104,857.33 |
| Dec 31, 2023 | Year 4 Depreciation | ($20,972.28) | $83,885.05 |
| Dec 31, 2024 | Impairment Loss | ($31,095.26) | $52,000.00 |
| Dec 31, 2025 | Year 6 Depreciation | ($23,500.00) | $28,500.00 |
| Dec 15, 2026 | YTD Depreciation | ($11,500.00) | $17,000.00 |
| Dec 15, 2026 | Disposal (Sale) | $18,000.00 | $0.00 |
Cumulative GL Impact Summary
| Account | Debits | Credits | Net |
|---|---|---|---|
| 15100 · Machinery & Equipment | $175,000.00 | $175,000.00 | $0.00 |
| 15150 · Accumulated Depreciation | $158,000.00 | $158,000.00 | $0.00 |
| 61500 · Depreciation Expense | $126,904.74 | $0.00 | $126,904.74 |
| 69000 · Impairment Loss | $31,095.26 | $0.00 | $31,095.26 |
| 80100 · Gain on Disposal | $0.00 | $1,000.00 | ($1,000.00) |
| 21000 · Accounts Payable | $175,000.00 | $175,000.00 | $0.00 |
| 12100 · Accounts Receivable | $18,000.00 | $18,000.00 | $0.00 |
| Net P&L Impact | ($157,000.00) | ||
- Fixed assets require dual-book tracking (GAAP and Tax) with different methods and lives
- Capital improvements extend asset life and increase depreciable basis
- Impairment testing should be performed when triggering events occur
- Book-tax differences from impairment create deferred tax tracking requirements
- Asset transfers update segments but typically don't change GL totals
- Disposal requires removing both cost and accumulated depreciation from books
- Section 1245 recapture treats gains as ordinary income up to depreciation claimed