Note on Fixed Assets Topics covered in Class Room
Shrikant Karnik
Asset Additions:
a) Quick Addition
Use the QuickAdditions process to quickly add ordinary assets. When you enter minimal information in the QuickAdditions window, the remaining asset information defaults from the asset category, asset corporate book, and the date placed in service.
b) Detailed Addition
Use the Detail Additions process to manually add complex assets, which the QuickAdditions process does not handle.
c) Mass Addition .
The mass additions process lets you add new assets or cost adjustments from other systems to your system automatically without re-entering the data. For example, you can add new assets from invoice lines brought over to Oracle Assets from Oracle Payables, or from CIP asset lines sent from Oracle Projects. CIP Asset additions will be discussed in more detail in the 11i Asset Management Fundamentals module CIP Asset Additions.
For the Mass Additions Create process to import an invoice line distribution to Oracle Assets, these conditions must be met:
- The line is charged to an account set up as an asset account.
- The asset account charged is set up in an existing asset category as a clearing account.
- The Track as Asset check box is selected. (It is selected automatically if the account is an Asset account as defined in the Natural Account segment of the Accounting Flexfield structure for the Set of Books being used.)
- The invoice is validated and accounted in Oracle Payables.
- The invoice line distribution is transferred to Oracle General Ledger from Payables.
- The general ledger date on the invoice line distribution is on or before the date that you specify for the create program.
- Your installation of Oracle Payables is tied to the same general ledger set of books as the corporate book for which you want to create mass additions.
Accounting Entry generated for Assets added through Quick Addition and Detailed Addition process:
Asset Cost (Balance Sheet Account) Debit
Asset Clearing Account (Balance Sheet A/c) Credit
Accounting Entry generated for Assets added with using Mass Addition:
i) Assume you have booked the Invoice for purchase of Asset in Payables
Asset Clearing (Balance Sheet Account) Debit
Accounts Payable (Balance Sheet Account) Credit
(Supplier Account)
ii) After performing a Mass Addition Process
Asset Cost (Balance Sheet Account) Debit
Asset Clearing Account (Balance Sheet A/c) Credit
Construction of Assets (CIP)
A construction–in–process (CIP) asset is an asset you construct over a period of time. You create and maintain your CIP assets as you spend money for raw materials and labor to construct them. Since a CIP asset is not yet in use, it does not depreciate. When you finish building the CIP asset, you can place it in service and begin depreciating it.
Accounting Entry generated for CIP Assets added through Quick Addition and Detailed Addition process:
Asset CIP Cost (Balance Sheet Account) Debit
Asset CIP Clearing Account (Balance Sheet A/c) Credit
Accounting Entry generated after Capitalising a CIP Assets :
Asset CIP Cost (Balance Sheet Account) Debit
Asset CIP Clearing Account (Balance Sheet A/c) Credit
Transfer an asset when there are changes in asset assignments to help you maintain accurate asset inventory.
Use the Assignments window in the Asset Workbench to transfer assets from one assignment to another within a corporate book.
Oracle Assets allows you to transfer multiple assets in one transaction. You use the Transfer From and Transfer To fields to identify the assets to be transferred.
Retirement of Assets
You can retire all or part of an asset when it is no longer in service. Oracle Assets continues to track a fully reserved asset until you retire it. A fully reserved asset is a fully depreciated asset.
Reinstatement:
Only assets retired during current fiscal can be reinstated. Assets retired in the previous fiscal year cannot be reinstated. You can reinstate only the most recent partial retirement. Also, reinstatement can be done for both individual and mass retirement transactions.
Depreciation
Projecting Depreciation for an Asset
-
You project depreciation for any asset in corporate, tax, and budget books to plan spending based on expected depreciation expense.
- Include depreciation expense for the budget amounts in the projection for the budget book.
- You add the projection amounts for depreciation projections and for existing assets to determine total future depreciation.
What-If analysis of Depreciation
What-If Depreciation Analysis:
• Forecasts depreciation for multiple scenarios using different depreciation criteria.
• Allows you to select assets using various selection criteria, and analyze the effects of expensing or amortizing changes to depreciation information.
• Projects depreciation on existing assets before changing the depreciation rules.
• Helps select the best depreciation strategy for assets not yet added in the system.
• If you are satisfied with the results of your analysis, you can enter the new parameters in the Mass Changes window to update your assets according to the parameters you specified in the what–if analysis.
I expect that you should practise the What if Analysis and Depreciation Projection to make you understand properly.
Running of Final Depreciation
Run depreciation to process all assets in a book for a period. Each asset book must have depreciation run individually. If you have assets that have not depreciated successfully, these assets are listed in the log file created by Oracle Assets when you run depreciation.
While running the depreciation you find a check box as Close Period , once you run the depreciation with selecting a close period check box, system closes the particular Period in Asset and cannot be re-opened. In Fixed Asset there is no separate process OR menu for opening and closing the Period. Next period gets opened automatically when you run the Depreciation Process with Close Period option.
Rolling back of Depreciation
If you have run depreciation for a particular period, you can use the Rollback Depreciation feature to restore assets to their state prior to running depreciation. For example, you may have outstanding adjustments or transactions that you need to process for a period; however, you have already run depreciation for that period. If the Close Period check box was not checked when you ran depreciation, you can roll back depreciation to include these outstanding transactions.
Assets Journal Entries
Oracle Assets creates journal entries for depreciation expense, asset cost, and other accounts. Oracle Assets automatically creates transaction journal entries for your general ledger, if you have set up the journal entry category for that transaction type in the asset book. Oracle Assets creates journal entries that summarize the activity for each account for each transaction type.
Oracle Assets also allows you to roll back journal entries in an open depreciation period, as long as those journals have not already been posted to General Ledger.
Physical Inventory
Physical inventory is the process of ensuring that the assets a company has listed in its production system match the assets it actually has in inventory. The Physical Inventory feature in Oracle Assets assists you in comparing and reconciling your physical inventory data. To use the Physical Inventory feature, you must first take physical inventory of your assets. Many of the Companies perform this activity as a routine and also as a requirement of statutory auditors.
Standard Reports
iii) Asset Register Report
iv) Asset Additions by Cost Center Report
v) Asset Transfers Report
vi) Asset Retirements By Cost Center Report
vii) Asset Additions Report
viii) Drill Down Report
ix) Additions by Source Report
x) Annual Additions Report
xi) Asset Additions Responsibility Report
xii) Asset Retirements Report
xiii) CIP Assets Report
xiv) CIP Assets Report
xv) CIP Capitalization Report
For getting more clarity, please read the Standard Operating Process for Fixed Assets.