Downpayment for assets

Question

Dear all,
Iin cases, where the advance is given for an asset, the advance amount gets parked in the asset GL. After MIGO also, the advance amount is highlighted in the asset GL until the advance is not settled by F-54 after MIRO. In our case, there is a time gap of around 10-15 days between MIGO & MIRO. Till the time of advance settlement, the amount appears double time in asset account & thus our MIS for cost of assets gets mis-leaded. The asset reports reflect advance amount as well as MIGO amount since the advance is not settled. For example, we give advance of Rs. 100 against purchase of an asset. The advance of Rs. 100 is debited to asset GL. When we receive goods of Rs. 100, the asset account will be debited further by Rs. 100 after MIGO & the total amount in asset GL will be Rs. 200. But the actual physical value of goods in the factory is Rs. 100. The advance amount will go out of asset GL only after the advance is settled by F-44 after MIRO.
Hence, we need to concentrate on how the advance amount can flow out from assets as soon as MIGO is done & parked into another new GL (say named as Advance pending for Clearance). The amount in the new GL can be squared off when MIRO is done.
Kindly suggest how it can be done.
Thanks & Regards,
A. Anandarajan

Answer 1

dear anandarajan
kindly note that
       entries for down payment to vendor would be
                  dr. advance to vendor a/c
                   cr. bank a/c
      on making gr
                 dr. asset
                 cr. gr/ir a/c
      on making a inoice
                   dr. gr/ir a/c
                   cr. vendor a/c
     on clearing of invoice against down payment
                  dr vendor a/c
                  cr. advance to vendor a/c
In the above entries the asset account will get a dr. only once.
regards
eashwar