From capital project to a depreciating asset
A project starts with an approved budget, and every receipt, invoice and hour of install labor charged to it is captured as it happens. When the equipment is in and working, the project becomes a fixed asset in one step and depreciation begins.
Capital projects / CP-2026-014
CP-2026-014 · New CNC cell, Plant 2
AFE-0381 · Project manager A. Patel
- Budget
- $412,000
- Actual
- $398,715.40
- Capitalizable
- $391,220.40
- Variance
- -3.2%
| Cost type | Budget | Actual | Source |
|---|---|---|---|
| Equipment | $340,000 | $336,480.00 | PO-55102 receipt |
| Tooling | $28,000 | $26,915.40 | Atlas Industrial invoices |
| Install labor | $24,000 | $23,180.00 | WO-24790, WO-24795 |
| Freight | $12,000 | $4,645.00 | Invoice INV-88140 |
| Training | $8,000 | $7,495.00 | Expensed, not capitalized |
Capitalize
- Creates asset CNC-07 at $391,220.40 · straight line · 10 years.
- Project locks and depreciation starts with the October run.
Step by step
- 01
The project is set up with a budget and an AFE
A. Patel opens the project with a budget by cost type, and the AFE is approved before any money is spent. The AFE number carries onto every PO and cost that follows.
Capital project recordAFE approval before spendingTwelve capital cost types
- 02
Costs are captured from receipts, invoices and labor
Receipts on PO lines tagged to the project debit CIP instead of inventory or expense. Vendor invoices and install labor from work orders are captured the same way, each with its journal entry.
Capital project receiptsCosts captured from contractor invoicesCosts captured from work-order laborCapital project coding on POs
- 03
Budget and actual are compared as you go
The project shows budget against actual by cost type and lets you open any line to see the vendor and document behind it. Costs that should be expensed, such as training, are split out from the capitalizable amount.
Budget against actualCapital and non-capital cost splitVendor drill-down across projects
- 04
Readiness is checked against the equipment
The readiness card tracks when the machine lands and shows every linked PO and work order against that date. It warns you when install work is scheduled before the equipment arrives.
Equipment arrival and readiness cardOpen commitments against budgetCapital project portfolio view
- 05
The project is capitalized into an asset
In one step the asset is created at the capitalizable cost, the entry posts and the project locks. The step refuses to run until useful life, salvage and method are stated, and it names any cost line that needs attention.
One-step capitalization to a fixed assetCapitalization checks before it postsCapitalize into components on the date you choose
- 06
Depreciation starts on the new asset
The new CNC cell depreciates with the next run on each of your books. The asset page traces back to the project, every cost and every journal entry.
Monthly depreciation runMACRS tax bookProject trace from purchase to asset
Related
Common questions
How do costs get onto a capital project?
Tag a PO line, a vendor invoice or a work order to the project. Receipts, invoices and labor then post to CIP and appear on the project with their journal entries.
Can part of a project be expensed?
Yes. Each cost line can be marked capitalizable or not, and only the capitalizable amount becomes the asset’s cost. Training and similar costs stay on the project as expense.
Can one project become more than one asset?
Yes. A project can be split into components, each with its own cost and life, so a cell can become the machine, the tooling and the conveyor as separate assets.
What happens to the project after it is capitalized?
It locks, so no more costs can be charged to it, and the asset links back to it for audit. A second attempt to capitalize the same project is refused.
The plant never stops. Neither does the record.
Bring an asset list and a month of work orders. We will load them and walk through your own plant in VenturusEAM, from the purchase order to the depreciation run.