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Accounting Entries in all modules Inventory , Purchasing ,

Payables , OE , Receivables ,Assets and Projects.


Assets Assets
Work-In-Process WIP
Inventory Standard Costing InventorystandardCosting
Receivables Receivables
1
Assets
Depreciation:
Dr. Depreciation Expense 200.00
Cr. Accumulated Depreciation 200.00
Example: The recoverable cost is $!""" and the method is
straight#line years$
Current and Prior Period Addition
%o& p&rchase and place the asset into service in %ear 1! '&arter 1$
(Payables)
Dr. Asset Clearing 4,000.00
Cr. Accounts Payable Liability 4,000.00
(Fixed Assets)
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Cr. Asset Clearing 4,000.00
Cr. Accumulated Depreciation 250.00
%o& place an asset in service in %ear 1! '&arter 1! b&t yo& do not enter
it into (racle Assets &ntil %ear )! '&arter )$ %o&r payables system
creates the same *o&rnal entries to asset clearing and acco&nts payable
liability as +or a c&rrent period addition$
(Oracle Assets PRIOR PERIOD ADDITION)
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Dr. Depreciation Expense(adjustment) 1250.00
Cr. Asset Clearing 4,000.00
Cr. Accumulated Depreciation 1500.00
,erge ,ass Additions
When yo& merge t-o mass additions! (racle Assets adds the asset cost o+ the mass addition that
yo& are merging to the asset acco&nt o+ the mass addition yo& are merging into$ (racle Assets
records the merge -hen yo& per+orm the transaction$ (racle Assets does not change the asset
clearing acco&nt *o&rnal entries it creates +or each line! so each o+ the appropriate clearing
acco&nts clears separately$
Payables Syste
Dr. Asset Cost 4,000.00
(mass addition #2
)
asset cost account)
Cr. Asset Clearing 3,000.00
(mass addition #1 accounts
payables clearing account)
Cr. Asset Clearing 1,000.00
(mass addition #2 accounts
payables clearing account)
ConstructionInProcess (CIP) Addition
%o& add a CIP asset$ .CIP assets do not depreciate/
Oracle Assets
Dr. CIP Cost 4,000.00
Cr. CIP Clearing 4,000.00
Deleted !ass Additions
(racle Assets creates no *o&rnal entries +or deleted mass additions and does not clear the asset
clearing acco&nts credited by acco&nts payable$
"ou clear t#e accounts by eit#er re$ersin% t#e in$oice in your payables syste& or
creatin% anual 'ournal entries in your %eneral led%er(
Capitali)ation
A capitali0ation transaction is similar to an addition transaction: yo& place the asset in service so
yo& can begin depreciating it$ When yo& capitali0e an asset in the period yo& added it! (racle
Assets creates the +ollo-ing *o&rnal entries:
Payables Syste
Dr. CIP Clearing 4,000.00
Cr. Accounts Payable Liability 4,000.00
Oracle Assets CAPITA*I+ED IN PERIOD ADDED
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Cr. CIP Clearing 4,000.00
Cr. Accumulated Depreciation 250.00
Oracle Assets CAPITA*I+ED A,TER PERIOD ADDED
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Cr. CIP Cost 4,000.00
Cr. Accumulated Depreciation 250.00
1
Asset Type Ad'ustents
I+ yo& change the asset type +rom capitali0ed to CIP! (racle Assets creates *o&rnal entries to debit
the CIP cost acco&nt and credit the asset clearing acco&nt$ (racle Assets does not create
capitali0ation or reverse capitali0ation *o&rnal entries +or CIP reverse transactions$
Oracle Assets C-AN.E T"PE ,RO! CAPITA*I+ED TO CIP (C/RRENT PERIOD)
Dr. CIP Cost 4,000.00
Cr. Asset Clearing 4,000.00
Cost Ad'ustents to Assets /sin% a *i0e1ased Depreciation !et#od
Example: %o& place an asset in service in %ear 1! '&arter 1$ The recoverable cost is $!"""$ The
li+e o+ yo&r asset is years! and yo& are &sing straight#line depreciation$ In %ear 1! '&arter ! yo&
receive an additional invoice +or the asset and change the recoverable cost to $!2""$
Payables Syste
Dr. Asset Clearing 800.00
Cr. Accounts Payable Liability 800.00
Oracle Assets
Dr. Asset Cost 800.00
Cr. Asset Clearing 800.00
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 300.00
Dr. Depreciation Expense 150.00
(adjustment)
Cr. Accumulated Depreciation 450.00
Aorti)ed
Oracle Assets A!ORTI+ED
Dr. Depreciation Expense 311.53
Cr. Accumulated Depreciation 311.53

Cost Ad'ustents to Assets /sin% a ,latRate Depreciation !et#od


Example: %o& place an asset in service in %ear 1! '&arter 1$ The recoverable cost is $!"""$ %o&
are depreciating the asset cost at a )"3 +lat#rate$ In %ear 1! '&arter ! yo& change the
recoverable cost to $!2""$
Payables Syste
Dr. Asset Clearing 800.00
Cr. Accounts Payable Liability 800.00
Oracle Assets
Dr. Asset Cost 800.00
Cr. Asset Clearing 800.00
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 240.00
Dr. Depreciation Expense 120.00
(adjustment)
Cr. Accumulated Depreciation 360.00
Aorti)ed
Oracle Assets A!ORTI+ED
Dr. Depreciation Expense 240.00
Cr. Accumulated Depreciation 240.00
Cost Ad'ustents to Assets /sin% a Diinis#in% 4alue Depreciation
!et#od
Example: %o& place an asset in service in %ear 1! '&arter 1$ The recoverable cost is $!"""$ %o&
are &sing a )"3 +lat#rate that yo& apply to the beginning o+ year net boo4 val&e$ In %ear )!
'&arter 1! yo& change the recoverable cost to $!2""$
Payables Syste
Dr. Asset Clearing 800.00
Cr. Accounts Payable Liability 800.00
Oracle Assets
Dr. Asset Cost 800.00
Cr. Asset Clearing 800.00
5
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 192.00
Dr. Depreciation Expense 160.00
(adjustment)
Cr. Accumulated Depreciation 352.00
Aorti)ed
Oracle Assets A!ORTI+ED
Dr. Depreciation Expense 200.00
Cr. Accumulated Depreciation 200.00
Cost Ad'ustents to Assets Depreciatin% /nder a /nits o0 Production
!et#od :
Example: %o& p&rchase an oil -ell +or $1"!"""$ %o& expect to extract 1"!""" barrels o+ oil +rom
this -ell$ Each 6&arter yo& extract )!""" barrels o+ oil$ In %ear 1! '&arter 1! yo& reali0e that yo&
entered the -rong asset cost$ %o& ad*&st the recoverable cost to $15!"""$
Payables Syste
Dr. Asset Clearing 5,000.00
Cr. Accounts Payable Liability 5,000.00
Oracle Assets
Dr. Asset Cost 5,000.00
Cr. Asset Clearing 5,000.00
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 3,000.00
Dr. Depreciation Expense 2,000.00
(adjustment)
Cr. Accumulated Depreciation 5,000.00
7
Aorti)ed
Oracle Assets A!ORTI+ED
Dr. Depreciation Expense 3,666.67
Cr. Accumulated Depreciation 3,666.67
Cost Ad'ustents to Capitali)ed and CIP Source *ines
When yo& trans+er so&rce lines yo& ad*&st the recoverable cost o+ an asset$ 8eca&se CIP assets
do not depreciate! (racle Assets does not need to reverse depreciation expense -hen yo&
trans+er invoice lines bet-een CIP assets$ I+ yo& trans+er so&rce lines +rom CIP to capitali0ed
assets! (racle Assets ta4es catch&p depreciation as +or any cost ad*&stment transaction$ I+ yo&
trans+er so&rce lines +rom capitali0ed to CIP assets! (racle Assets m&st bac4 o&t some o+ the
depreciation +rom the capitali0ed asset$
Trans0er Source *ines 1et5een Assets (Prior Period)
(racle Assets creates the +ollo-ing *o&rnal entries +or an so&rce line trans+er bet-een capitali0ed
assets added in a prior period$
Oracle Assets TRANS,ER *INE ,RO! ASSET 67 TO ASSET 68
Dr. Asset Cost 400.00
(from asset #2 category)
Cr. Asset Cost 400.00
(from asset #1 category)
Oracle Assets AD9/ST DEPRECIATION ON ASSET 67
Dr. Accumulated Depreciation 70.00
(from asset #1 category)
Cr. Depreciation Expense 70.00
Oracle Assets AD9/ST DEPRECIATION ON ASSET 68
Dr. Depreciation Expense 55.00
Dr. Depreciation Expense 70.00s
(adjustment)
Cr. Accumulated Depreciation 125.00
(from asset #2 category)
Trans0er Source *ines 1et5een Assets (Current Period)
(racle Assets creates the +ollo-ing *o&rnal entries +or an so&rce line trans+er bet-een assets
added in the c&rrent period:
Oracle Assets TRANS,ER *INE ,RO! ASSET 67 TO ASSET 68
Dr. Asset Cost 300.00
(from asset #2 category)
Cr. Asset Clearing (from accounts 300.00
payable for asset #1)
9
Cost Ad'ustent by Addin% a !ass Addition to an E2istin% Asset
I+ yo& add a mass addition to an asset! (racle Assets creates a *o&rnal entry to the asset cost
acco&nt o+ the existing asset$ (racle Assets also credits the clearing acco&nt yo& assigned to the
invoice distrib&tion line in acco&nts payable to net it to 0ero$
I+ yo& -ant the existing asset to ass&me the asset category and description o+ the mass addition!
(racle Assets creates a *o&rnal entry +or the ne- total asset cost to the asset cost acco&nt o+ the
mass addition:s category$ It also creates *o&rnal entries +or the clearing acco&nt yo& assigned to
the invoice line in acco&nts payable! and +or the clearing or cost acco&nt o+ the original addition
category$
(racle Assets creates the +ollo-ing *o&rnal entries +or a capitali0ed $)!""" mass addition added
to a ne-! man&ally added $5"" asset! -here the asset &ses the category o+ the mass addition:
Oracle Assets ADD !ASS ADDITION TO AN E3ISTIN. ASSET
Dr. Asset Cost 2,500.00
(from asset category of mass
addition)
Cr. Asset Clearing 500.00
(from original asset category)
Cr. Asset Clearing 2,000.00
(from accounts payable)
;epreciation ,ethod Ad*&stments
Example: %o& place an asset in service in %ear 1! '&arter 1$ The recoverable cost is $!"""! the
li+e is years! and yo& are &sing the )"" declining balance depreciation method$ In %ear )!
'&arter 1! yo& change the depreciation method to straight#line$
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 250.00
Dr. Accumulated Depreciation 750.00
Cr. Depreciation Expense 1,000.00
(adjustment)
Aorti)ed
Oracle Assets A!ORTI+ED
Dr. Depreciation Expense 166.67
Cr. Accumulated Depreciation 166.67
<i+e Ad*&stments
Example: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $!"""! the li+e is
years! and yo& are &sing straight#line depreciation$ In %ear )! '&arter )! yo& change the asset
li+e to 5 years$
2
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 200.00
Dr. Accumulated Depreciation 50.00
Cr. Depreciation Expense 250.00
(adjustment)
Aorti)ed
Oracle Assets A!ORTI+ED
Dr. Depreciation Expense 183.33
Cr. Accumulated Depreciation 183.33
Rate Ad'ustents ,latRate Depreciation !et#od
Example: %o& place an asset in service in %ear 1! '&arter 1$ The recoverable cost is $!""" and
yo& are depreciating the asset cost at a )"3 +lat#rate$ In %ear )! '&arter 1! yo& change the +lat#
rate to )53$
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 250.00
Dr. Depreciation Expense 300.00
(adjustment)
Cr. Accumulated Depreciation 550.00
Aorti)ed
Oracle Assets A!ORTI+ED
Dr. Depreciation Expense 250.00
Cr. Accumulated Depreciation 250.00
=
Rate Ad'ustents Diinis#in% 4alue Depreciation !et#od
Example: %o& place an asset in service in %ear 1! '&arter 1$ The recoverable cost is $!""" and
yo& are &sing a )"3 +lat#rate that yo& apply to the beginning o+ year net boo4 val&e$ In %ear )!
'&arter 1! yo& change the +lat#rate to )53$
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 187.50
Dr. Depreciation Expense 255.00
(adjustment)
Cr. Accumulated Depreciation 442.50
Aorti)ed
Oracle Assets A!ORTI+ED
Dr. Depreciation Expense 200.00
Cr. Accumulated Depreciation 200.00
Capacity Ad*&stments
Example: %o& p&rchase an oil -ell +or $1"!"""$ %o& expect to extract 1"!""" barrels o+ oil +rom
this -ell$ Each 6&arter yo& extract )!""" barrels o+ oil$ In %ear 1! '&arter yo& discover that yo&
entered the -rong capacity$ %o& increase the prod&ction capacity to 5"!""" barrels$
E2pensed
Oracle Assets E3PENSED
Dr. Depreciation Expense 400.00
Dr. Accumulated Depreciation 4,400.00
Cr. Depreciation Expense 4,800.00
(adjustment)
Oracle Assets A!ORTI+ED
Aorti)ed
Dr. Depreciation Expense 181.82
Cr. Accumulated Depreciation 181.82
1"
>o&rnal Entries +or Trans+ers and Reclassi+ications
Example: %o& place an asset in service in %ear 1! '&arter 1$ The recoverable cost is $!"""! the
li+e is years! and yo& are &sing straight#line depreciation$
C&rrent Period Trans+er 8et-een Cost Centers:
Prior Period Trans+er 8et-een Cost Centers:
C&rrent Period Trans+er 8et-een 8alancing ?egments
Prior Period Trans+er 8et-een 8alancing ?egments:
@nit Ad*&stment:
Reclassi+ication:
Current Period Trans0er 1et5een Cost Centers
In %ear )! '&arter )! yo& trans+er the asset +rom cost center 1"" to cost center )"" in the c&rrent
period$
Oracle Assets TRANS,ER ASSET : C-AR.E DEPRECIATION
Cost Center 100
Dr. Accumulated Depreciation 1,250.00
Cr. Asset Cost 4,000.00
Cost Center 200
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Cr. Accumulated Depreciation 1,500.00
11
1
Oracle Assets TRANS,ER ASSET : AD9/ST AND C-AR.E DEPRECIATION
Cost Center 100
Dr. Accumulated Depreciation 2,750.00
Cr. Asset Cost 4,000.00
Cr. Depreciation Expense 250.00
(adjustment)
Cost Center 200
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Dr. Depreciation Expense 250.00
(adjustment)
Cr. Accumulated Depreciation 3,000.00
Current Period Trans0er 1et5een 1alancin% Se%ents
In %ear 1! '&arter ! yo& trans+er the asset +rom the A8C ,an&+act&ring Company to the A%B
;istrib&tion Company$
Oracle Assets TRANS,ER ASSET
ABC Manufacturing
Dr. Accumulated Depreciation 2,750.00
Dr. Intercompany Receivables 1,250.00
1)
Cr. Asset Cost 4,000.00
XYZ Distribution
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Cr. Accumulated Depreciation 3,000.00
Cr. Intercompany Payables 1,250.00
11
1
Oracle Assets AD9/ST AND C-AR.E DEPRECIATION
ABC Manufacturing
Dr. Accumulated Depreciation 2,750.00
Dr. Intercompany Receivables 1,500.00
Cr. Asset Cost 4,000.00
Cr. Depreciation Expense 250.00
(adjustment)
XYZ Distribution
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Dr. Depreciation Expense 250.00
(adjustment)
Cr. Accumulated Depreciation 3,000.00
Cr. Intercompany Payables 1,500.00
/nit Ad'ustent
A &nit ad*&stment is similar to a trans+er! since yo& m&st &pdate assignment in+ormation -hen yo&
change the n&mber o+ &nits +or an asset$ Cor example! yo& place the same $!""" asset in
service -ith t-o &nits assigned to cost center 1""$ In %ear )! '&arter 1! yo& reali0e the
asset act&ally has +o&r &nits! t-o o+ -hich belong to cost center )""$
Oracle Assets AD9/ST /NITS
Cost Center 100
Dr. Accumulated Depreciation 750.00
Cr. Asset Cost 2,000.00
1
Cost Center 200
Dr. Asset Cost 2,000.00
Cr. Accumulated Depreciation 750.00
Dote: I+ all &nits remain in the original cost center! (racle Assets does not create any *o&rnal
entries$
Reclassi0ication
Example: %o& reclassi+y an asset +rom o++ice e6&ipment to comp&ters in %ear 1! '&arter 1$ The
asset cost is $!"""! the li+e is years! and yo& are &sing straight#line depreciation$
When yo& reclassi+y an asset in a period a+ter the period yo& entered it! (racle Assets creates
*o&rnal entries to trans+er the cost and acc&m&lated depreciation to the asset and acc&m&lated
depreciation acco&nts o+ the ne- asset category$ This occ&rs -hen yo& create *o&rnal entries +or
yo&r general ledger$$ (racle Assets also changes the depreciation expense acco&nt to the de+a&lt
depreciation expense Acco&nt +or the ne- category! b&t does not ad*&st +or prior period expense$
1
Oracle Assets TRANS,ER COST AND ACC/!/*ATED DEPRECIATION
Ofce Equipment
Dr. Accumulated Depreciation 500.00
Cr. Asset Cost 4,000.00
Computers
Dr. Asset Cost 4,000.00
Dr. Depreciation Expense 250.00
Cr. Accumulated Depreciation 750.00
>o&rnal Entries +or Retirements and Reinstatements
When yo& retire an asset and create *o&rnal entries +or that period!(racle Assets creates *o&rnal
entries +or yo&r general ledger +or each component o+ the gainEloss amo&nt$ (racle Assets
creates *o&rnal entries +or either the gain or the loss acco&nts +or the +ollo-ing components:
proceeds o+ sale! cost o+ removal! net boo4 val&e retired! and reval&ation reserve retired$ (racle
Assets also creates *o&rnal entries to clear the proceeds o+ sale and cost o+ removal$
(racle Assets creates *o&rnal entries +or the retirement acco&nts yo& set &p in the 8oo4 Controls
+orm$ I+ yo& enter distinct gain and loss acco&nts +or each component o+ the gainEloss amo&nt!
15
(racle Assets creates m&ltiple *o&rnal entries +or these acco&nts$ %o& can enter di++erent sets o+
retirement acco&nts +or retirements that res&lt in a gain and retirements that res&lt in a loss$
Depreciation 0or Retireents
The retirement convention! date retired! and depreciation method control ho- m&ch depreciation
(racle Assets ta4es -hen yo& retire an asset$ (racle Assets reverses the year#to#date
depreciation i+ the asset:s depreciation method does not depreciate it in the year o+ retirement$ In
this case! -hen yo& per+orm a +&ll retirement! (racle Assets reverses the year#to#date
depreciation o+ the asset! and comp&tes the gain or loss &sing the res&lting net boo4 val&e$ Cor
partial retirements! (racle Assets reverses the appropriate +raction o+ the year#to#date
depreciation and comp&tes the gain or loss &sing the appropriate +raction o+ the res&lting net
boo4 val&e$ I+ the depreciation method ta4es depreciation in the year o+ retirement!
(racle Assets &ses yo&r retirement convention to determine -hether the asset is eligible +or
additional depreciation in that year or -hether some o+ that year:s depreciation m&st be reversed$
When yo& per+orm a partial retirement! (racle Assets depreciates the portion o+ the asset yo& did
not retire based on the method yo& &se$ I+ yo&r depreciation method m&ltiplies a +lat#rate by the
cost! (racle Assets depreciates the asset:s cost remaining a+ter a partial retirement$ Cor assets
that &se a diminishing val&e method! (racle Assets depreciates the remaining +raction o+ the
asset:s net boo4 val&e as o+ the beginning o+ the +iscal year$
Depreciation 0or Reinstateents
The retirement convention! date retired! and period in -hich yo& reinstate an asset control ho-
m&ch depreciation (racle Assets calc&lates -hen yo& reinstate an asset$ When yo& reinstate a
retired asset! (racle Assets &s&ally calc&lates some additional depreciation expense in the period
in -hich yo& per+orm the reinstatement! &nless yo& per+orm it in the same period that yo& retired
the asset$ This additional depreciation is the depreciation that -o&ld have been ta4en i+ yo& had
not retired the asset$ ?ometimes! ho-ever! a reinstatement res&lts in a reversal o+
depreciation$ This occ&rs i+ the retirement convention ca&sed some additional depreciation -hen
yo& retired the asset! and then yo& reinstate the asset be+ore the retirement prorate date$ Then
(racle Assets reverses the extra depreciation that it too4 at retirement! and -aits &ntil the
appropriate acco&nting periods to ta4e it$
Current Period Retireents
Example: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $!"""! the li+e is
years! and yo& are &sing straight#line depreciation$ In %ear 1! '&arter 1! yo& sell the asset +or
$)!"""$ The cost to remove the asset is $5""$ The asset &ses a retirement convention and
depreciation method -hich ta4e depreciation in the period o+ retirement$ %o& retire reval&ation
reserve in this boo4$
Recei$ables Syste
Dr. Accounts Receivable 2,000.00
Cr. Proceeds of Sale Clearing 2,000.00
17
Payables Syste
Dr. Cost of Removal Clearing 500.00
Cr. Accounts Payable 500.00
Oracle Assets !/*TIP*E .AIN:*OSS ACCO/NTS
Dr. Accumulated Depreciation 2,500.00
Dr. Proceeds of Sale Clearing 2,000.00
Dr. Cost of Removal Gain 500.00
Dr. Revaluation Reserve 600.00
Dr. Net Book Value Retired Gain 1,500.00
Cr. Asset Cost 4,000.00
Cr. Proceeds of Sale Gain 2,000.00
Cr. Cost of Removal Clearing 500.00
Cr. Revaluation Reserve Retired Gain 600.00
I+ yo& enter the same acco&nt +or each gain and loss acco&nt! (racle
Assets creates a single *o&rnal entry +or the net gain or loss$
8oo4 Controls +orm:
Accounts .ain *oss
Proceeds o+ ?ale 1""" 1"""
Cost o+ Removal 1""" 1"""
Det 8oo4 Fal&e Retired 1""" 1"""
Reval&ation Reserve Retired 1""" 1"""
Oracle Assets SIN.*E .AIN:*OSS ACCO/NT
Dr. Accumulated Depreciation 2,500.00
Dr. Proceeds of Sale Clearing 2,000.00
Dr. Revaluation Reserve 600.00
Cr. Asset Cost 4,000.00
Cr. Cost of Removal Clearing 500.00
Cr. Gain/Loss 600.00
Prior Period Retireent
Example: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $!"""! the li+e is
years! and yo& are &sing straight#line depreciation$ In %ear 1! '&arter 1! yo& discover that the
asset -as sold in %ear 1! '&arter 1! +or $)!"""$ The removal cost -as $5""$ The asset
19
&ses a retirement convention and depreciation method -hich allo- yo& to ta4e depreciation in the
period o+ retirement$
Recei$ables Syste
Dr. Accounts Receivable 2,000.00
Cr. Proceeds of Sale Clearing 2,000.00
Payables Syste
Dr. Cost of Removal Clearing 500.00
Cr. Accounts Payable 500.00
Oracle Assets
Dr. Accumulated Depreciation 2,500.00
Dr. Proceeds of Sale Clearing 2,000.00
Dr. Cost of Removal Loss 500.00
Dr. Net Book Value Retired Loss 1,750.00
Cr. Proceeds of Sale Loss 2,000.00
Cr. Cost of Removal Clearing 500.00
Cr. Asset Cost 4,000.00
Cr. Depreciation Expense 250.00
Current Period Reinstateent
Example: %o& discover that yo& retired the -rong asset$ (racle Assets creates *o&rnal entries +or
the reinstatement to debit asset cost! credit acc&m&lated depreciation! and reverse the gain or
loss yo& recogni0ed +or the retirement$ (racle Assets reverses the *o&rnal entries +or
proceeds o+ sale! cost o+ removal! net boo4 val&e retired! and reval&ation reserve retired$ (racle
Assets also reverses the *o&rnal entries yo& made to clear the proceeds o+ sale and cost o+
removal$ (racle Assets also creates *o&rnal entries to recover the depreciation not charged to the
asset and +or the c&rrent period depreciation
e2pense(
Oracle Assets
Dr. Asset Cost 4,000.00
Dr. Cost of Removal Clearing 500.00
Dr. Gain / Loss 600.00
Dr. Depreciation Expense 250.00
Cr. Accumulated Depreciation 2,750.00
Cr. Proceeds of Sale Clearing 2,000.00
Cr. Revaluation Reserve 600.00
12
Prior Period Reinstateent
Example: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $!"""! the li+e is
years! and yo& are &sing straight#line depreciation$ In %ear )! '&arter 1! yo& retire the asset$ In
%ear )! '&arter ! yo& reali0e that yo& retired the -rong asset so yo& reinstate it$
Oracle Assets
Dr. Asset Cost 4,000.00
Dr. Cost of Removal Clearing 500.00
Dr. Proceeds of Sale Loss 2,000.00
Dr. Depreciation Expense 250.00
Dr. Depreciation Expense 500.00
(adjustment)
Cr. Net Book Value Retired Loss 2,750.00
Cr. Cost of Removal Loss 500.00
Cr. Proceeds of Sale Clearing 2,000.00
Cr. Accumulated Depreciation 2,000.00
Assets ,ully Reser$ed /pon Addition
I+ yo& add an asset -ith an acc&m&lated depreciation e6&al to the recoverable cost! it is +&lly
reserved &pon addition$ When yo& retire it! (racle Assets does not bac4 o&t any depreciation!
even i+ yo& assigned the asset a depreciation method that bac4s o&t all depreciation in the
year o+ retirement$ Go-ever! it creates all the other *o&rnal entries associated -ith retiring a
capitali0ed asset$
NonDepreciated Capitali)ed:ConstructionInProcess (CIP) Assets
A non#depreciated capitali0ed asset or a CIP asset has no acc&m&lated depreciation$ There+ore!
(racle Assets does not create *o&rnal entries to catch &p depreciation to the retirement prorate
date! and does not remove the acc&m&lated depreciation$ Go-ever! (racle Assets creates
all other *o&rnal entries associated -ith retiring a capitali0ed asset$
Reinstateent Transactions
PENDIN. Asset Retireent
When yo& reinstate an asset retired in the c&rrent acco&nting period that the calc&late gains and
losses program has not yet processed! the retirement transaction is deleted! and the asset is
immediately reinstated$ Do *o&rnal entries are created$
PROCESSED Asset Retireent
When yo& reinstate an asset retired in a previo&s acco&nting period or already processed in the
c&rrent period! the existing retirement transaction gets a ne- ?tat&s REID?TATE! and the asset
is reinstated -hen yo& process retirements$ (racle Assets creates *o&rnal entries to catch &p any
missed depreciation expense$
>o&rnal Entries +or Reval&ations
The +ollo-ing examples ill&strate the e++ect on yo&r assets and yo&r acco&nts -hen yo& speci+y
di++erent reval&ation r&les$
1=
Re$alue Accuulated Depreciation
Example 1: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $1"!"""! the li+e
is 5 years! and yo& are &sing straight#line depreciation$
In %ear )! '&arter 1 yo& reval&e the asset &sing a reval&ation rate o+ 53$ Then in %ear ! '&arter
1 yo& reval&e the asset again &sing a reval&ation rate o+ #1"3$
Re$aluation Rules:
Reval&e Acc&m&lated ;epreciation H %es
Amorti0e Reval&ation Reserve H Do
Retire Reval&ation Reserve H Do
(racle Assets bases the ne- depreciation expense on the reval&ed remaining net boo4 val&e$
In %ear 5! '&arter ! at the end o+ the asset:s li+e! yo& retire the asset -ith no proceeds o+ sale or
cost o+ removal$
)"
1
)1
RE4A*/ATION 7
"ear 8& ;uarter 7& <= re$aluation
*Accumulated Depreciation
!"isting Accumulated Depreciation #
$!"isting Accumulated Depreciation " %Revaluation Rate & '(()*
2,000 + [2,000 X (5/100)] = 2,100
**Revaluation Reserve
!"isting Revaluation Reserve # C+ange in ,et -ook .alue
0 + (8,400 8,000) = 400
Oracle Assets RE4A*/ATION
Dr. Asset Cost 500.00
Cr. Revaluation Reserve 400.00
Cr. Accumulated Depreciation 100.00
RE4A*/ATION 8
7>= re$aluation in "ear ?& ;uarter 7:
Oracle Assets RE4A*/ATION
Dr. Revaluation Reserve 420.00
Dr. Accumulated Depreciation 630.00
Cr. Asset Cost 1,050.00
Retireent in "ear <& ;uarter ?:
Oracle Assets RETIRE!ENT
Dr. Accumulated Depreciation 9,450.00
Cr. Asset Cost 9,450.00
))
Accuulated Depreciation Not Re$alued
E2aple 8: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $1"!"""! the li+e
is 5 years! and yo& are &sing straight#line depreciation$ In %ear )! '&arter 1 yo& reval&e the
asset &sing a reval&ation rate o+ 53$ Then in %ear ! '&arter 1 yo& reval&e the asset again &sing
a reval&ation rate o+ #1"3$
Re$aluation Rules:
Reval&e Acc&m&lated ;epreciation H Do
Amorti0e Reval&ation Reserve H Do
Retire Reval&ation Reserve H %es
Cor the +irst reval&ation! the asset:s ne- reval&ed cost is $1"!5""$ ?ince yo& do not reval&e the
acc&m&lated depreciation! (racle Assets trans+ers the balance to the reval&ation reserve in
addition to the change in cost$ ?ince yo& are also not amorti0ing the reval&ation reserve! this
amo&nt remains in the reval&ation reserve acco&nt &ntil yo& retire the asset! -hen (racle Assets
trans+ers it to the appropriate reval&ation reserve retired acco&nt$ (racle Assets bases the ne-
depreciation expense on the reval&ed net boo4 val&e$ Cor the second reval&ation! the asset:s
reval&ed cost is $=!5"$ Again! since yo& do not reval&e the acc&m&lated depreciation! (racle
Assets trans+ers the balance to the reval&ation reserve along -ith the change in cost$
%o& retire the asset in %ear 5! '&arter ! -ith no proceeds o+ sale or cost o+ removal$
)1
1
)
RE4A*/ATION 7
<= re$aluation in "ear 8& ;uarter 7:
Oracle Assets RE4A*/ATION
Dr. Asset Cost 500.00
Dr. Accumulated Depreciation 2,000.00
Cr. Revaluation Reserve 2,500.00
RE4A*/ATION 8
7>= re$aluation in "ear ?& ;uarter 7:
Oracle Assets RE4A*/ATION
Dr. Accumulated Depreciation 5,250.00
Cr. Asset Cost 1,050.00
Cr. Revaluation Reserve 4,200.00
Retireent in "ear <& ;uarter ?:
Oracle Assets RE4A*/ATION
Dr. Accumulated Depreciation 9,450.00
Dr. Revaluation Reserve 6,700.00
Cr. Revaluation Reserve Retired Gain 6,700.00
Cr. Asset Cost 9,450.00
Aorti)in% Re$aluation Reser$e
Example 1: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $1"!"""! the li+e
is 5 years! and yo& are &sing straight#line depreciation$
In %ear )! '&arter 1 yo& reval&e the asset &sing a rate o+ 53$ Then in %ear ! '&arter 1 yo&
reval&e the asset again &sing a rate o+ #1"3$
Reval&ation R&les:
Reval&e Acc&m&lated ;epreciation H Do
Amorti0e Reval&ation Reserve H %es
Cor the +irst reval&ation! the asset:s ne- reval&ed cost is $1"!5""$ ?ince yo& do not reval&e the
acc&m&lated depreciation! (racle Assets trans+ers the entire amo&nt to the reval&ation reserve$
?ince yo& are amorti0ing the reval&ation reserve! (racle Assets calc&lates the reval&ation
amorti0ation amo&nt +or each period &sing the asset:s depreciation method$ (racle Assets also
bases the ne- depreciation expense on the reval&ed net boo4 val&e$
Cor the second reval&ation! the asset:s reval&ed cost is $=!5"$ Again! since yo& do not reval&e
the acc&m&lated depreciation! (racle Assets trans+ers the entire amo&nt to the reval&ation
reserve$
)5
The e++ects o+ the reval&ations are ill&strated in the +ollo-ing table:
1
)7
RE4A*/ATION 7
"ear 8& @uarter 7& <= re$aluation
Oracle Assets RE4A*/ATION
Dr. Asset Cost 500.00
Dr. Accumulated Depreciation 2,000.00
Cr. Revaluation Reserve 2,500.00
(racle Assets creates the +ollo-ing *o&rnal entries each period to amorti0e the reval&ation
reserve:
Oracle Assets RE4A*/ATION
Dr. Revaluation Reserve 156.25
Cr. Revaluation Amortization 156.25
RE4A*/ATION 8
"ear ?& @uarter 7& 7>= re$aluation
Oracle Assets RE4A*/ATION
Dr. Accumulated Depreciation 5,250.00
Cr. Asset Cost 1,050.00
Cr. Revaluation Reserve 4,200.00
(racle Assets creates the +ollo-ing *o&rnal entries each period to amorti0e the reval&ation
reserve:
Oracle Assets RE4A*/ATION
Dr. Revaluation Reserve 681.25
Cr. Revaluation Amortization 681.25
)9
Re$aluation o0 a ,ully Reser$ed Asset
Example : %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $1"!"""! the li+e
is 5 years! and yo& are &sing straight#line depreciation$ The asset:s li+e extension +actor is ) and
the maxim&m +&lly reserved reval&ations allo-ed +or this boo4 is 1$
In year 5! 6&arter the asset is +&lly reserved$ In %ear =! '&arter 1 yo& -ant to reval&e the asset
-ith a reval&ation rate o+ 53$
Re$aluation Rules:
Reval&e Acc&m&lated ;epreciation H %es
Amorti0e Reval&ation Reserve H Do
Cirst! (racle Assets chec4s -hether this +&lly reserved asset has been previo&sly reval&ed as
+&lly reserved! and that the maxim&m n&mber o+ times is not exceeded by this reval&ation$ ?ince
this asset has not been previo&sly reval&ed as +&lly reserved! this reval&ation is allo-ed$
The asset:s ne- reval&ed cost is $1"!5""$ The li+e extension +actor +or this asset is )! so the
asset:s ne- li+e is ) _ 5 years H 1" years$ (racle Assets calc&lates depreciation expense over its
ne- li+e o+ 1" years$
(racle Assets calc&lates the depreciation ad*&stment o+ $)!""" &sing the ne- 1" year asset li+e$
It trans+ers the change in net boo4 val&e to the reval&ation reserve acco&nt$
(racle Assets reval&es the acc&m&lated depreciation &sing the 53 reval&ation rate$ The change
in net boo4 val&e is trans+erred to the reval&ation reserve acco&nt$ ?ince yo& do not amorti0e the
reval&ation reserve! the amo&nt remains in the reval&ation reserve acco&nt$
)2
1
Oracle Assets RE4A*/ATION
Dr. Asset Cost 500.00
Dr. Accumulated Depreciation 1,600.00
Cr. Revaluation Reserve 2,100.00
)=
Re$aluation 5it# *i0e E2tension Ceilin%
Example 5: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $1"!"""! the li+e
is 5 years! and yo& are &sing straight#line depreciation$ The asset:s li+e extension +actor is 1$"
and its li+e extension ceiling is )$
In %ear 5! '&arter the asset is +&lly reserved$ In year =! 6&arter 1 yo& -ant to reval&e the asset
-ith a reval&ation rate o+ 53$
Reval&ation R&les:
Reval&e Acc&m&lated ;epreciation H %es
Amorti0e Reval&ation Reserve H Do
To determine the depreciation ad*&stment! (racle Assets &ses the smaller o+ the li+e extension
+actor and the li+e extension ceiling$ ?ince the li+e extension ceiling is smaller than the li+e
extension +actor! (racle Assets &ses the ceiling to calc&late the depreciation ad*&stment$ The
ne- li+e &sed to calc&late the depreciation ad*&stment is ) _ 5 years H 1" years! the li+e
extension ceiling o+ ) m&ltiplied by the original 5 year li+e o+ the asset$
(racle Assets calc&lates the asset:s depreciation expense &nder the ne- li+e o+ 1" years &p to
the reval&ation period! and moves the di++erence bet-een this val&e and the existing acc&m&lated
depreciation +rom acc&m&lated depreciation to reval&ation reserve$
(racle Assets then determines the ne- asset cost &sing the reval&ation rate o+ 53 and reval&es
the acc&m&lated depreciation -ith the same rate$ (racle Assets calc&lates the asset:s ne- li+e by
m&ltiplying the c&rrent li+e by the li+e extension +actor$ The asset:s ne- li+e is 1 _ 5 years H 15
years$ (racle Assets bases the ne- depreciation expense on the reval&ed net boo4 val&e and
the ne- 15 year li+e$
1"
1
Depreciation Ad'ustent (calculated usin% li0e e2tension ceilin%)A
8&>>>
Oracle Assets RE4A*/ATION
Dr. Asset Cost 500.00
Dr. Accumulated Depreciation 1,600.00
Cr. Revaluation Reserve 2,100.00
Re$aluation 5it# a Re$aluation Ceilin%
Example 7: %o& o-n an asset -hich has been damaged d&ring its li+e$
%o& placed the asset in service in %ear 1! 6&arter 1$ The asset cost is $1"!"""! the li+e is 5 years!
and yo& are &sing straight#line depreciation$ %o& entered a reval&ation ceiling o+ $1"!1"" +or the
asset$ In year 1! 6&arter 1 yo& reval&e the asset:s category -ith a reval&ation
rate o+ 53$
Re$aluation Rules:
Reval&e Acc&m&lated ;epreciation H Do
Amorti0e Reval&ation Reserve H %es
I+ (racle Assets applied the ne- reval&ation rate o+ 53! the asset:s ne- cost -o&ld be higher
than the reval&ation ceiling +or this asset! so instead (racle Assets &ses the ceiling as the ne-
cost$ The ceiling creates the same e++ect as reval&ing the asset at a rate o+ 13$ (racle
Assets bases the asset:s ne- depreciation expense on the reval&ed asset cost$
11
1
Oracle Assets RE4A*/ATION
Dr. Asset Cost 300.00
Dr. Accumulated Depreciation 5,000.00
Cr. Revaluation Reserve 5,300.00
(racle Assets creates the +ollo-ing *o&rnal entries each period to
amorti0e the reval&ation reserve:
Oracle Assets RE4A*/ATION
Dr. Revaluation Reserve 530.00
Cr. Revaluation Amortization 530.00
1)
>o&rnal Entries +or Tax Acc&m&lated ;epreciation Ad*&stments
Example: %o& place an asset in service in %ear 1! '&arter 1$ The asset cost is $!"""! the li+e is
years! and yo& are &sing straight#line depreciation$ In %ear ! '&arter 1! yo&r tax a&thority
re6&ests that yo& change the depreciation ta4en in %ear ) +rom $1""" to $2""$
(racle Assets creates the +ollo-ing *o&rnal entries +or the reserve ad*&stment:
Oracle Assets
Dr. Accumulated Depreciation 200.00
Cr. Depreciation Adjustment 200.00
Gome
11
BorC in Process Accountin% Transactions
The +ollo-ing are the basic acco&nting transactions carried o&t in WIP
1$ Relieve Inventory and charge WIP at standard Cost$
)$ ,ove Assemblies on the shop +loor and charge Reso&rces
1$ Earn Reso&rces and (verheads into >obs and ?ched&les
$ Relieve WIP and Charge Inventory at ?tandard Cost$
E2aple
.i$en belo5 is an e2aple o0 5#at transaction and 5#ic# sta%e t#ey are %enerated in
Oracle Application(
T#e 0ollo5in% table details t#e costs t#at are used 0or t#e accountin% 0lo5s(
Ite Cost At start o0 Production
,aterial ,aterial
(verhead
Reso&rce (?P (verhead Total
This <evel " )" 75 1) 1)" )19
Previo&s
<evel
15" 15 5 " " )5"
Total 7<> D< 77> D8 7E> ?FG
Pre$ious *e$el
Costs
,aterial ,aterial
(verhead
Reso&rce (?P (verhead Total
Component
1
1"" 1" 5 " " 1=5
Component
)
1" 1 11
Component
1
)" ) ))
Total 7<> 7< ?< > ?> 8<>
This <evel Costs
Cost
Element
(peration @nits Inc&rred
cost per
?tandard
Cost E&nit
1
&nit
Reso&rce
R?1
1" 1" 5" "
(verhead 1" I 1)5 .)5"3 o+ Rs 5"/ 1""
Reso&rce
Rs)
)" 5 1" )5
(verhead )" 1" )" )"
(?P (?1 1" 1" )5 )"
(?P (?) " 1" 1" 1)
,aterial (EG J 1" )" )"
Total 8F> 8DG
* (verhead +or operation 1" is applied at )5"3 o+ the reso&rce val&e earned at the operation
J ,aterial overhead is earned -hen an assembly is completed +rom a discrete *ob or
repetitive sched&le into inventory$ ,aterial (verhead is never earned in the *ob or sched&le$
Transactions
1$ ,aterial Transactions ! Iss&e all material Transaction : P&sh all components at standard
cost into the *ob 1" &nits at )5" H)5""
;r$ WIP Acco&nts )5""
Cr$ ?&binventory Acco&nts )5""
2. ,aterial Transactions! Ret&rn speci+ic component : Ret&rn ) de+ective &nits o+ component
) to inventory ) &nits at 11 H 77
;r$ ?&binventory Acco&nts 77
Cr$ WIP Acco&nts 77
3. ,aterial Transactions ! Iss&e ?peci+ic Component : Replace de+ective components -ith
s&bstit&te items
) &nits at " H 2"
;r$ WIP Acco&nts 2"
Cr$ ?&binventory Acco&nts 2"
Resource charged at Actual Cost and no variance accounted
4. ?hop Transaction! Reso&rce -Eo rate variance : Charge reso&rce R?1 at act&al +or
operation 1"$
11 &nits at 5" H 55"
;r$ WIP Acco&nts 55"
Cr$ Reso&rce Absorption Acco&nt 55"
5. ?hop Cloor Transaction! Reverse reso&rce charge : Reverse (vercharge
1 &nit at 5" H 5"
;r$ Reso&rce Absorption Acco&nt 5"
Cr$ WIP Acco&nts 5"

Resource Charged at Standard Cost and variance accounted
15
6. ?hop Cloor Transaction! Reso&rce -ith rate variance : Charge reso&rce R?) at standard
+or operation )" 5 &nits at )5 H 1)5
;r$ WIP Acco&nts 1)5
Cr$ Reso&rce Absorption Acco&nt 15" . Inc&rred cost o+ 1" +or 5 &nits H 15" /
;r$ Rate Fariance )5
7. ?hop Cloor Transaction! (?P reso&rce -Eo rate variance : Charge (?P (?1 at act&al +or
operation 1" Receive 11 &nits at )5 H )95
(n p&shing the 6&antity to o&tside processing operation
;r$ WIP Acco&nts )95
Cr$ Receiving Inspection Acco&nt )95
(n receiving the material a+ter being processed
;r$ Receiving Inspection Acco&nt )95
Cr$ Inventory AP Accr&al Acco&nt )95
8. ?hop Cloor Transaction! Reverse (?P overcharge : Reverse (vercharge 1 &nit at )5 H
)5
;r$ Inventory AP Accr&al Acco&nt )5
Cr$ Receiving Inspection Acco&nt )5
;r$ Receiving Inspection Acco&nt )5
Cr$ WIP Acco&nts )5
9. ?hop Cloor Transactions! (?P reso&rce -ith rate variance : Charge (?P (?P) at
standard +or operation )"$ Receive 1" &nits at 1) H 1)"
;r$ WIP Acco&nts 1)"
Cr$ Receiving Inspection Acco&nt 1)"
;r$ Receiving Inspection Acco&nt 1)"
Cr$ Inventory AP Accr&al Acco&nt 1""
Cr$ P&rchase Price Fariance )"
10. ?hop Cloor Transactions! Reso&rce based (EG : Charge )5"3 on the reso&rce charged
in step
55" I )5" 3 H 1195
;r$ WIP Acco&nts 1195
Cr$ (verhead Absorption Acco&nts 1195
11. ?hop Cloor Transaction ! Reverse reso&rce based (EG : Reverse overhead +or reso&rce
reversed in step 5 5" I )5" 3 H 1)5
;r$ (verhead Absorption Acco&nts 1)5
Cr$ WIP Acco&nts 1)5
17
12. ?hop Cloor Transactions! Item based (EG : ,ove thro&gh operation )" and charge item
based overhead 1" &nits at )" H )""
;r$ WIP Acco&nts )""
Cr$ (verhead Absorption Acco&nts )""
Suary o0 Transactions
T#e table belo5 %i$es a suary o0 all t#e transactions at t#is point(
BorC in Process 4alue
Cost Incurred Cost Relie$ed 1alance
Cost Element This
<evel
Previo&s
<evel
This
<evel
Previo&s
<evel
This
<evel
Previo&s
<evel
,aterial 151 151
,aterial (G 15" 15"
Reso&rce 7)5 5" 7)5 5"
(?P 19" " 19" "
(verhead 15" "" 15" ""
Total 8??< 8<7? 8??< 8<7?
Costs are relie$ed 0ro BorC in Process 5#en asseblies are copleted to in$entory or
scrapped at an operation( Costs are al5ays relie$ed 0ro 9obs and Sc#edules at Standard(
13. ?hop Cloor Transaction : ?crap ) assemblies at operation "$ ) &nits at =5$=" H =1
;r$ ?crap Acco&nt ==1$2"
Cr$ WIP Acco&nts ==1$2"
14. ?hop Cloor Transaction : Ret&rn repaired &nit +rom scrap$ 1 &nit at =5$=" H =5$="
;r$ WIP Acco&nts =5$="
Cr$ ?crap Acco&nt =5$="
15. WIP Completion Transaction : Complete = assemblies +rom WIP to inventory$ = &nits at
=5$=" H =5=K = &nits at )" +or ,aterial (verhead$
;r$ ?&binventory Acco&nts 511=
Cr$ WIP Acco&nts =5=
Cr$ ,aterial (EG Abs Acco&nt 12"
19
T#e table belo5 %i$es a suary o0 all t#e transactions at t#is point(
BorC in Process 4alue
Cost Incurred Cost Relie$ed 1alance
Cost Element This
<evel
Previo&s
<evel
This
<evel
Previo&s
<evel
This
<evel
Previo&s
<evel
,aterial 151 .15""/ 1
,aterial (G 15" .15"/ "
Reso&rce 7)5 5" .5)5/ .5"/ 1"" "
(?P 19" " .1)"/ 5" "
(verhead 15" "" .1)""/ .""/ )5" "
Total 8??< 8<7? (8>?<) (8<>>) ?>> 7?
4ariances are reco%nised 5#en you close your 'obs and sc#edules(
16. Close >ob or ?ched&le : Recognise this and previo&s level variances$
;r$ Fariance Acco&nts 1
Cr$ WIP Acco&nts 1
Cost /pdate in BIP
The Cost &pdate reval&es yo&r discrete and asset nonLstandard *obs$
E2aple
Carrying +rom the previo&s example
@pdate Previo&s level Costs
1$ ,aterial cost increases by 5"$
)$ ,aterial overhead rate remains at 1"3 b&t the cost increases by 5 d&e to increase in material
cost$
12
1$ Reso&rce cost decreases by 15$
$ (verhead rate increases +rom 1""3 to 15"3 o+ reso&rce cost$E
5$ (verhead cost remains at 5 d&e to decrease in reso&rce costs
7$ '&antity in *ob H 1"
1ill o0 !aterial Cost
Material Material
OH
Resource OSP Overhead Total
(ld Cost 15" 15 5 " 5 )55
De- Cost )"" )" 1" " 5 )=5
IncreaseE
;ecrease
5" 5 .15/ " " "


@pdate this <evel Costs
1$ Reso&rce R?1 amo&nt decreases by 5
)$ (&tside processing (?P1 amo&nt per item increases by )"$
1$ (verhead rate increases +rom )""3 o+ R?1 val&e to ""3 o+ R?1 val&e$
$ 1" ho&rs o+ R?1 charged to the *ob$
5$ 1" &nits received +or (?P1
1ill o0 !aterial Cost
Resource OSP Overhead Total
(ld Cost 15 1"" 9" )"5
De- Cost 1" 1)" 1)" )9"
IncreaseE ;ecrease .5/ )" 5" 75
Ad*&sting Acco&nting Entries
;r$ ,aterial 5""
;r$ ,aterial (G 5"
;r$ (?P )""
;r$ (verhead 5""
Cr$ Reso&rce )""
Cr$ ?tandard Cost Fariance Acco&nt 1"5"
Ad*&stment Recorded in the >ob
1ill o0 !aterial Cost
Material Material
OH
Resource OSP Overhead Total
This <evel .5"/ )"" 5"" 75"
Previo&s <evel 5"" 5" .15"/ " " ""
IncreaseE 5"" 5" .)""/ )"" 5"" 1"5"
1=
;ecrease
"
S
1
Gome
)
Purchase Orders and Releases
P( Accr&al Acco&nt Menerator
P( 8&dget Acco&nt Menerator
P( Charge Acco&nt Menerator
P( Fariance Acco&nt Menerator
Re@uisitions
P( Re6&isition Accr&al Acco&nt Menerator
P( Re6&isition 8&dget Acco&nt Menerator
P( Re6&isition Charge Acco&nt Menerator
P( Re6&isition Fariance Acco&nt Menerator
PO Accrual Account .enerator and
PO Re@uisition Accrual Account .enerator
Accr&al Acco&nt +or Expense Item
Accr&al Acco&nt +rom (rgani0ation
P( Pro*ect#RelatedN .%o& can c&stomi0e this +&nction i+ yo&
-ant to b&ild pro*ect#related acco&nts &sing yo&r o-n r&les and
i+ (racle Pro*ects is installed$/
P&rchase (rder Clex8&ilder @pgrade
Wor4 Item ;estination Type
P( 8&dget Acco&nt Menerator and
P( Re6&isition 8&dget Acco&nt Menerator
8&ild Inventory Charge Acco&nt
Met 8&dget Acco&nt +rom ItemE?&b
Met Charge Acco&nt
Met Item <evel 8&dget Acco&nt
Met (rg <evel 8&dget Acco&nt
Item Pre#;e+inedN
P( Pro*ect#RelatedN .%o& can c&stomi0e this +&nction i+ yo&
-ant to b&ild pro*ect#related acco&nts &sing yo&r o-n r&les and
i+ (racle Pro*ects is installed$/
P&rchase (rder Clex8&ilder @pgrade
PO C#ar%e Account .enerator and
PO Re@uisition C#ar%e Account .enerator
8&ild Inventory Charge Acco&nt
Expense Acco&nt
>ob WIP Acco&nt
P( Pro*ect#RelatedN .%o& can c&stomi0e this +&nction i+ yo&
-ant to b&ild pro*ect#related acco&nts &sing yo&r o-n r&les and
i+ (racle Pro*ects is installed$/
P&rchase (rder Clex8&ilder @pgrade
1
?ched&le Acco&nt
Type o+ WIP
Wor4 Item ;estination Type
P( Fariance Acco&nt Menerator and
P( Re6&isition Fariance Acco&nt Menerator
Met Charge Acco&nt
P( Pro*ect#RelatedN .%o& can c&stomi0e this +&nction i+ yo&
-ant to b&ild pro*ect#related acco&nts &sing yo&r o-n r&les and
i+ (racle Pro*ects is installed$/
P&rchase (rder Clex8&ilder @pgrade
Fariance Acco&nt +rom (rgani0ation
Wor4 Item ;estination Type

Inventory - Standard Costing


Prere@uisites
;e+ine (rgani0ation Parameters
Costing ,ethod is set to ?tandard
Trans+er ;etail to M< is appropriately set
;e+a&lt ,aterial ?&b#Element acco&nt .Re6&ired/
;e+ine cost types are de+ined$
;e+ine activities and activity costs are de+ined$
;e+ine material overhead de+a&lts are de+ined
;e+ine item! item costs! and establish item cost controls$
<a&nch transaction managers are la&nched
Inventory ?tandard Cost Transactions
The +ollo-ing transctions can be per+ormed in distrib&tion
organi0ations$
P&rchase (rder Receipt To Receiving Inspection:
;elivery Crom Receiving Inspection To Inventory:
P&rchase (rder Receipt To Inventory:
Ret&rn To ?&pplier Crom Receiving:
Ret&rn To ?&pplier Crom Inventory:
?ales (rder ?hipments:
R,A Receipts:
R,A Ret&rn:
,iscellaneo&s Transactions:
Inter#(rgani0ation Trans+ers:
?&binventory Trans+ers:
Internal Re6&isitions:
Cycle Co&nt and Physical Inventory:
P&rchasing related transactions -ith inventory destinations are also disc&ssed! b&t not those -ith
expense destinations s&ch as o++ice s&pplies and non#inventory p&rchases$
Purc#ase Order Receipt to Recei$in% Inspection
%o& can &se the Receipts -indo- in (racle P&rchasing to receive material +rom a s&pplier into a
receiving location$ %o& can also &se this -indo- to receive material directly to inventory$ Please
note that this section addresses Inventory destinations only$
B#en you recei$e aterial or outside processin% ites 0ro a supplier into recei$in%
inspection& t#e Recei$in% Inspection account is debited and t#e In$entory A:P Accrual
account is credited based on t#e @uantity recei$ed and t#e purc#ase order price.
Account Debit Credit
Receiving Inspection acco&nt O P( price AA
Inventory AEP Accr&al acco&nt O P( price AA
5
Deli$ery ,ro Recei$in% Inspection to In$entory
%o& can &se the Receiving Transactions -indo- to move material +rom receiving inspection to
inventory$ The system &ses the 6&antity and the p&rchase order price o+ the delivered item to
&pdate the receiving inspection acco&nt and 6&antity$
The system &ses the standard cost o+ the delivered item to &pdate the s&binventory balances$
Account Debit Credit
?&binventory acco&nts O standard cost AA
Receiving Inspection acco&nt O P( price AA
Debit:Credit P&rchase Price Fariance
I+ yo&r item has material overhead associated -ith it! the s&binventory acco&nt is debited +or the
amo&nt o+ the material overhead and the material overhead absorption acco&nt.s/ are credited$
7
Purc#ase Price 4ariance (PP4)
P&rchase price variances .PPF/ occ&r -hen there are di++erences bet-een the standard cost and
the p&rchase order cost o+ an item$
E2pense Subin$entories and E2pense Ites
When yo& receive inventory expense items into expense s&binventory locations! the +ollo-ing
acco&nting entry is generated:
Account Debit Credit
?&binventory Expense acco&nt O P( price AA
Inventory AEP Accr&al acco&nt O P( price AA
When yo& receive an expense .non#asset/ inventory item! or into an expense s&binventory! the
s&binventory expense acco&nt instead o+ the val&ation acco&nt is debited$ 8eca&se the expense
acco&nt is debited at the p&rchase order price! there is no p&rchase price variance$
Purc#ase Order Receipt to In$entory
When yo& receive material +rom a s&pplier directly to inventory! the receipt and delivery
transactions are per+ormed in one step$
Cirst! the Receiving Inspection acco&nt is debited and the Inventory AEP Accr&al acco&nt credited
based on 6&antity received and the p&rchase order price$
Account Debit Credit
Receiving Inspection acco&nt O P( price AA
Inventory AEP Accr&al acco&nt O P( price AA
Dext! the ?&binventory and Receiving Inspection acco&nts are! respectively! debited and credited
based on the transaction 6&antity and standard cost o+ the received item$
Account Debit Credit
?&binventory acco&nts O standard cost AA
Receiving Inspection acco&nt O P( price AA
Debit:Credit P&rchase Price Fariance
I+ yo&r item has material overhead.s/! the s&binventory entry is debited +or the material overhead
and the material overhead absorption acco&nt.s/ is credited$
Account Debit Credit
?&binventory acco&nts AA
,aterial (verhead Absorption acco&nt AA
Attention: I+ the s&binventory acco&nt is combined -ith the above entry! the material overhead
absorption acco&nt adds one additional entry$
9
Return To Supplier ,ro In$entory
When yo& do not &se receiving inspection! the ret&rn to s&pplier transaction &pdates the same
acco&nts as the direct receipt to inventory! -ith reverse transaction amo&nts$ The Inventory AEP
Accr&al acco&nt is debited and the Receiving Inspection acco&nt is credited based on 6&antity
received and the p&rchase order price$
,orei%n Currencies
As -ith the p&rchase order receipt to inventory transaction! the system converts the p&rchase
order price to the +&nctional c&rrency and &ses this converted val&e +or the ret&rn to s&pplier
acco&nting entries$
Sales Order S#ipents
?hip material on a sales order &sing (rder EntryE?hipping$ The acco&nting entries generated by a
sales order shipment are:
Acco&nt ;ebit Credit
Cost o+ Moods ?old acco&nt AA
?&binventory acco&nts O standard cost AA
8ased on the r&les yo& de+ine in (rder EntryE?hipping! the Acco&nt Menerator dynamically
creates the cost o+ goods sold acco&nt$
Attention: %o& do not create any acco&nting in+ormation -hen yo& ship +rom an expense
s&binventory or ship an expense inventory item$
R!A Receipts
%o& can receive items bac4 +rom a c&stomer &sing the R,A .ret&rn material a&thori0ation/
Receipts -indo-$
Acco&nt ;ebit Credit
?&binventory acco&nts O standard cost AA
Cost o+ Moods ?old Acco&nt AA
This &ses the same acco&nt as the original cost o+ goods sold transaction$
Attention: %o& do not create any acco&nting entries -hen yo& receive material +or an R,A
+or an expense item or expense s&binventory$

2
R!A Returns
%o& can ret&rn items received into inventory thro&gh an R,A bac4 to the c&stomer &sing R,A
Ret&rns -indo-$
Cor example! yo& can send bac4 P Qret&rnR P an item that -as ret&rned by the c&stomer to yo&
+or repair$
This transaction reverses an R,A receipt$ It also mimics a sales order shipment and &pdates the
same acco&nts as a sales order shipment$
Account Debit Credit
Cost o+ Moods ?old Acco&nt AA
?&binventory acco&nts O standard cost AA
Attention: ;o not create any acco&nting entries -hen yo& ret&rn material +or an R,A +or an
expense item or expense s&binventory$
!iscellaneous Transactions
@sing the ,iscellaneo&s Transaction -indo-! yo& can iss&e material +rom a s&binventory to a
general ledger acco&nt .or acco&nt alias/ or receive material to a s&binventory +rom an acco&nt or
alias$ An acco&nt alias identi+ies another name +or a general ledger acco&nt$
Su%%estion: @se acco&nt aliases +or acco&nt n&mbers yo& &se +re6&ently$ Cor example! &se the
alias ?CRAP +or yo&r general ledger scrap acco&nt$
Iss&ing material +rom a s&binventory to a general ledger acco&nt or alias generates the +ollo-ing
acco&nting entries:
Account Debit Credit
Entered Meneral <edger Acco&nt O standard cost AA
?&binventory acco&nts O standard cost AA
Receiving material to a s&binventory +rom an acco&nt or an alias generates the +ollo-ing
acco&nting entries:
Account Debit Credit
?&binventory acco&nts O standard cost AA
Entered Meneral <edger Acco&nt O standard cost AA
Expense ?&binventories and Expense Items When yo& receive into an expense location or
receive an expense item! yo& have expensed the material$ I+ yo& &se the miscellaneo&s
transaction to iss&e +rom an expense location!
%o& can iss&e to an acco&nt or to an asset s&binventory o+ the
IN4:Allo5 E2pense to Asset Trans0er pro0ile option in Oracle In$entory is set to "es(
I+ iss&ed to an acco&nt the system ass&mes the material is cons&med at the expense
location and moves the 6&antity -itho&t any associated val&e$ I+ trans+erred to an asset
s&binventory! the material moves at its c&rrent cost$
When yo& per+orm a miscellaneo&s transaction to receive an expense item to either an asset or
expense s&binventory! no acco&nting occ&rs$ ?ince the acco&nt balance co&ld involve di++erent
costs over time! The system ass&mes that the cost o+ the expense item is &n4no-n$
=
InterOr%ani)ation Trans0ers
%o& can trans+er material +rom one inventory organi0ation to another either directly or thro&gh
intransit inventory$ Intransit inventory represents material that has not yet arrived at the receiving
organi0ation$
/sin% Intransit In$entory %o& can move material +rom the shipping organi0ation to intransit
inventory &sing the Trans+er ?&binventories -indo-$ %o& can &se the Receipts -indo- to move
material +rom intransit invenotry to the receiving organi0ation$
Issue Transaction
;epending &pon the Creight (n 8oard .C(8/ point de+ined in the inventory organi0ation
relationship! the shipment to intransit inventory creates the +ollo-ing acco&nting entries:
,O1 Point is set to Recei$in%:
Account Or%ani)ation Debit Credit
Intransit inventory acco&nt ?ending AA
?&binventory acco&nts ?ending AA
,O1 Point is set to S#ipent:
Account Or%ani)ation Debit Credit
Inter#(rgani0ation Receivable ?ending AA
?&binventory acco&nts ?ending AA
Intransit Inventory acco&nt Receiving AA
Inter#(rgani0ation Payable Receiving AA
Receipt Transaction
;epending &pon the C(8 point de+ined in the organi0ation relationship! the receipt +rom intransit
inventory creates the +ollo-ing acco&nting entries:
,O1 Point is set to Recei$in%:
Account Or%ani)ation Debit Credit
Inter#(rgani0ation Receivable ?ending AA
Intransit Inventory acco&nt ?ending AA
?&binventory acco&nts Receiving AA
Inter#(rgani0ation Payable Receiving AA
,O1 Point is set to S#ipent:
Account Or%ani)ation Debit Credit
?&binventory acco&nts Receiving AA
Intransit Inventory acco&nt Receiving AA
5"
In addition to acco&nting +or the movement o+ the material! these transactions also &pdate the
inter#organi0ation receivable and payable acco&nts$ These inter#organi0ation clearing acco&nts
represent inter#organi0ation receivables and payables +or the respective shipping and receiving
organi0ations$
Direct InterOr%ani)ation Trans0er
When yo&r organi0ation relationship is set to directly trans+er material! Inventory per+orms both
the iss&e and the receipt transaction at the time o+ the iss&e$ Any di++erence bet-een the cost o+
items in the t-o organi0ations is recogni0ed as variance in the receiving organi0ation$
The acco&nting entries created are as +ollo-s:
Account Or%ani)ation Debit Credit
Inter#(rgani0ation Receivable ?ending AA
?&binventory acco&nts ?ending AA
?&binventory acco&nts Receiving AA
Inter#(rgani0ation Payable Receiving AA
@se the Trans+er ?&binventories -indo- +or direct trans+ers$ ,aterial (verhead and Inter#
(rgani0ation Trans+ers If your item has material overhead(s/! yo& earn material overhead on
inter#organi0ation trans+ers$ The s&binventory entry is increased +or the material overhead -ith a
credit to the material overhead absorption acco&nt.s/ in the receiving organi0ation$
Account Debit Credit
?&binventory acco&nts AA
,aterial (verhead Absorption acco&nt AA
Attention: The s&binventory acco&nt is combined -ith the above entry$ The material overhead
absorption transaction adds one additional acco&nt to the entry$
The C(8 Point changes the acco&nting +or +reight$ With C(8 receiving! +reight is accr&ed on the
receipt transaction by the sending organi0ation$ With C(8 shipment! +reight is accr&ed on the
shipment transaction by the receiving organi0ation$ Cor direct trans+ers! the receipt and shipment
transaction occ&r at the same time$
When the C(8 Point is set to Receiving! the trans+er creates the +ollo-ing +reight and trans+er
charge entries at time o+ receipt:
Account Or%ani)ation Debit Credit
Inter#(rgani0ation Receivable ?ending AA
Creight Expense acco&nt ?ending AA
Inter#(rgani0ation Receivable ?ending AA
51
Inter#(rg$ Trans+er Credit ?ending AA
(rg$ ,aterial acco&nt Receiving AA
Inter#(rgani0ation Payable Receiving AA
Cor the receiving organi0ation! the inter#organi0ation payable acco&nt is increased +or +reight and
trans+er charges$ These charges are incl&ded in the comparison to the standard cost$
When the FOB Point is set to Shipment! the trans+er creates the +ollo-ing +reight and trans+er
charge entries at shipment:
Account Or%ani)ation Debit Credit
Inter#(rgani0ation Receivable ?ending AA
Inter#(rg$ Trans+er Credit ?ending AA
Intransit Inventory acco&nt Receiving AA
Creight Expense acco&nt Receiving AA
Inter#(rgani0ation Payable Receiving AA
Intransit inventory incl&des both +reight and trans+er charges$ The inter#organi0ation payable is
only increased +or trans+er charges$
E2pense Subin$entories and E2pense Ites:
When yo& receive an inter#organi0ation trans+er into an expense s&binventory or receive an
expense inventory item! yo& have expensed the material and cannot directly iss&e it$ The system
ass&mes the material cost is cons&med at the expense location$
@sing the direct or intransit method! yo& can receive material to an expense s&binventory or
receive an expense inventory item$ When yo& receive to expense locations or receive expense
inventory items! the s&binventory expense acco&nt is debited +or the receiving organi0ation!
instead o+ the val&ation acco&nts$ The s&binventory expense acco&nt is charged the total
transaction val&e +rom the other organi0ation$
InterOr%ani)ation Trans0ers and Sets o0 1ooCs
The Inter#(rgani0ation ;irect Trans+er transaction also s&pports trans+ers +rom any set o+ boo4s!
even i+ the c&rrency is di++erent$ Go-ever! yo& cannot &se the Inter#(rgani0ation Intransit -ith
m&ltiple sets o+ boo4s$ These transactions &se receiving +&nctions +rom P&rchasing! -hich only
s&pports one set o+ boo4s$ To per+orm an inter#organi0ation intransit trans+er +rom one set o+
boo4s to another! yo& need to per+orm a combination o+ t-o transactions: a direct
trans+er and an intransit trans+er$
Subin$entory Trans0ers
This transaction increases the acco&nts o+ the To ?&binventory and decreases the Crom
?&binventory! b&t has no net e++ect on overall inventory val&e$I+ yo& speci+y the same
s&binventory as the Crom and To ?&binventory! yo& can move material bet-een locators -ithin a
s&binventory$
Account Subin$entory Debit Credit
?&binventory acco&nts To AA
?&binventory acco&nts Crom AA
5)
E2pense Subin$entories and E2pense Ites
%o& can iss&e +rom an asset to an expense s&binventory! and yo& can iss&e +rom an expense
s&binventory i+ the (racle Inventory
IN4:Allo5 E2pense to Asset Trans0er pro0ile option is set to "es(
The system ass&mes the material is cons&med at the expense location$
Internal Re@uisitions :
%o& can &se the internal re6&isitions to replenish inventory$ %o& can so&rce material +rom a
s&pplier! a s&binventory -ithin yo&r organi0ation! or +rom another organi0ation$ ;epending &pon
the so&rce yo& choose! the acco&nting entries are similar to one o+ the proceeding scenarios$
Go-ever! &nli4e inter#organi0ation trans+ers! internal re6&isitions do not s&pport +reight charges$
Cycle Count and P#ysical In$entory :
@se cycle co&nting and physical inventory to correct inventory on#hand balances$ A cycle co&nt
&pdates the acco&nts o+ the a++ected s&binventory and o++sets the ad*&stment acco&nt yo&
speci+y$
I+ yo& physically co&nt more than yo&r on#hand balance! the acco&nting sentries are:
Account Debit Credit
?&binventory acco&nts O standard cost AA
Ad*&stment acco&nt O standard cost AA
I+ yo& co&nt less than yo&r on#hand balance! the acco&nting entries are:
Account Debit Credit
Ad*&stment acco&nt O standard cost AA
?&binventory acco&nts O standard cost AA
<i4e a cycle co&nt! a physical inventory ad*&stment also &pdates the acco&nts o+ the a++ected
s&binventories and the physical inventory ad*&stment acco&nt yo& speci+y$
?&ggestion: ?ince the standard cost is not stored as yo& +ree0e the physical 6&antities! yo&
sho&ld not per+orm a standard cost &pdate &ntil yo& have ad*&sted yo&r physical inventory$
E2pense Subin$entories and E2pense Ites
The system does not record acco&nting entries +or expense s&binventories or expense items +or
either physical inventory or cycle co&nt ad*&stments$ Go-ever! the on#hand balance o+ an
expense s&binventory is corrected i+ yo& trac4 the 6&antities$
51
Wor4 in Process ?tandard Cost Transactions
The +ollo-ing cost transactions can occ&r -hen (racle Wor4 in Process is installed:
Component Iss&e and Ret&rn Transactions:
,ove Transactions:
Reso&rce Charges:
(&tside Processing Charges:
(verhead Charges:
Assembly ?crap Transactions:
Assembly Completion Transactions:
>ob Close Transactions:
Period Close Transactions:
Wor4 in Process Cost @pdate Transactions:
Coponent Issue and Return Transactions
Component iss&e and ret&rn transactions can be la&nched in a variety o+ -ays$ ?ee: Component
Iss&e and Ret&rn Transaction (ptions! (racle Wor4 in Process @ser:s M&ide and 8ac4+l&sh
Transactions! (racle Wor4 in Process @ser:s M&ide$
Costin% Issue and Return Transactions
Iss&e transactions increase the -or4 in process val&ation and decrease the inventory val&ation$
The acco&nting entries +or iss&e transactions are:
Account Debit Credit
WIP acco&nting class val&ation acco&nts AA
?&binventory elemental acco&nts AA
T#e accountin% entries 0or return transactions are:
Account Debit Credit
?&binventory elemental acco&nts AA
WIP acco&nting class val&ation acco&nts AA
?&binventory acco&nts are de+ined in the ;e+ine ?&binventories -indo- in (racle Inventory$ WIP
elemental acco&nts are de+ined in the WIP Acco&nting Classes -indo- in Wor4 in Process$ ?ee:
;e+ining ?&binventories! (racle Inventory @ser:s M&ide! ?&binventory Meneral <edger Acco&nt
Cields! (racle Inventory @ser:s M&ide! and WIP Acco&nting Classes! (racle Wor4 in Process
@ser:s M&ide$
!o$e Transactions
A move transaction moves assemblies -ithin an operation! s&ch as +rom '&e&e to R&n! or +rom
one operation to the next$ ,ove transactions can a&tomatically la&nch operation completion
bac4+l&shing and charge reso&rces and overheads$
%o& can per+orm move transactions &sing the ,ove Transactions -indo-! (pen ,ove
Transaction Inter+ace -indo-! or the Enter Receipts -indo- in P&rchasing$
5
1acC0lus# !aterial Transactions
With bac4+l&shing! yo& iss&e component material &sed in an assembly or s&bassembly by
exploding the bills o+ material! and then m&ltiplying by the n&mber o+ assemblies prod&ced$
,ove transactions can create operation p&ll bac4+l&sh material transactions that iss&e component
material +rom designated WIP s&pply s&binventories and locators to a *ob or repetitive sched&le$
Cor bac4+l&sh components &nder lot or serial n&mber control! yo& assign the lot or serial n&mbers
d&ring the move transaction$
When yo& move bac4-ard in a ro&ting! Wor4 in Process a&tomatically reverses operation p&ll
bac4+l&sh transactions$
The acco&nting entries +or move transactions are:
Account Debit Credit
WIP acco&nting class val&ation acco&nts AA
?&binventory elemental acco&nts AA
The acco&nting entries +or ret&rn transactions are:
Account Debit Credit
?&binventory elemental acco&nts AA
WIP acco&nting class val&ation acco&nts AA
!o$ed 1ased Resource C#ar%in%
As the assemblies yo& b&ild pass thro&gh the operations on their ro&tings! move transactions
charge all pre#assigned reso&rces -ith an a&to#charge type o+ WIP ,ove at their standard rate$
%o& can charge reso&rces based &pon a +ixed amo&nt per item moved in an operation .Item
basis/ or based &pon a +ixed lot charge per item moved in an operation .<ot basis/$ Cor reso&rces
-ith a basis o+ <ot! Wor4 in Process a&tomatically charges the lot cost &pon completion o+
the +irst assembly in the operation$
%o& can also enter man&al reso&rce transactions associated -ith a move! or independent o+ any
moves$ %o& can man&ally charge reso&rces to a *ob and repetitive sched&le provided the *ob and
repetitive sched&le has a ro&ting$ %o& can also transact reso&rces thro&gh the (pen Reso&rce
Transaction Inter+ace$
Resource C#ar%es
Wor4 in Process s&pports +o&r reso&rce a&tocharging methods:
,an&al! WIP ,ove! P( ,ove! and P( Receipt$
%o& can charge reso&rces at an act&al rate$
%o& can also charge reso&rce overheads a&tomatically as yo& charge reso&rces$
WIP ,ove Reso&rce Charges %o& can a&tomatically charge reso&rces at their standard rate to a
*ob or repetitive sched&le -hen yo& per+orm a move transaction &sing either the ,ove
Transactions -indo- or the (pen ,ove Transaction Inter+ace$ When yo& move assemblies +rom
the '&e&e or R&n intra operation steps +or-ard to the To move! Re*ect! or ?crap intraoperation
steps! or to the next operation! Wor4 in Process charges all pre#assigned reso&rces -ith an
charge type o+ WIP ,ove at their standard rate$ Cor reso&rces -ith a basis o+ Item! Wor4 in
Process a&tomatically charges the reso&rce:s &sage rate or amo&nt m&ltiplied by the
reso&rce:s standard cost &pon completion o+ each assembly in the operation$ Cor reso&rces -ith
a basis o+ <ot! Wor4 in Process a&tomatically charges the reso&rce:s &sage rate or amo&nt
m&ltiplied by the reso&rce:s standard cost &pon completion o+ the +irst assembly in the operation$
55
%o& can &ndo the WIP ,ove reso&rce charges a&tomatically by moving the assemblies +rom
'&e&e or R&n o+ yo&r c&rrent operation to '&e&e or R&n o+ any prior operation! or by moving the
assemblies +rom the To move! Re*ect! or ?crap intraoperation steps bac4-ard to the '&e&e or
R&n intraoperation steps o+ the same operation! or to any intraoperation step o+ any prior
operation$
Wor4 in Process applies WIP ,ove reso&rce transactions to m&ltiple repetitive sched&les on a
line based on ho- the assemblies being moved are allocated$ Wor4 in Process allocates moves
across m&ltiple repetitive sched&les based on a +irst in#+irst o&t basis$
!anual Resource C#ar%es
%o& can charge man&al reso&rces associated -ith a move transaction or independent o+ any
moves$ ,an&al reso&rce transactions re6&ire yo& to enter the act&al reso&rce &nits applied rather
than a&tocharging the reso&rce:s &sage rate or amo&nt based on the move 6&antity$ %o& can
charge reso&rces &sing that reso&rce:s &nit o+ meas&re or any valid alternate$ %o& can man&ally
charge reso&rces to a *ob or repetitive sched&le provided the *ob or repetitive sched&le has a
ro&ting$ I+ yo& &se the ,ove Transactions -indo- to per+orm moves and man&al reso&rce
transactions at the same time! Wor4 in Process displays all pre#assigned man&al reso&rces -ith
an charge type o+ ,an&al assigned to the operations completed in the move$ I+ the reso&rce is a
person#type reso&rce! yo& can enter an employee n&mber$ In addition to the reso&rces
displayed! yo& can man&ally charge any reso&rce to a *ob or repetitive sched&le! even i+ yo& have
not previo&sly assigned the reso&rce to an operation in the *ob or repetitive sched&le$
%o& can also man&ally charge reso&rces to an operation added ad hoc by entering any reso&rce
de+ined +or the department associated -ith the operation$ Wor4 in Process applies ,an&al
reso&rce transactions to the +irst open repetitive sched&le on the line$ %o& can correct or &ndo
man&al reso&rce transactions by entering negative reso&rce &nits -or4ed$
Costin% Resource C#ar%es at Resource Standard
Reso&rce charges increase -or4 in process val&ation$ The acco&nting entries +or reso&rce
transactions are:
Account Debit Credit
WIP acco&nting class reso&rce val&ation acco&nt AA
Reso&rce absorption acco&nt AA
I+ A&tocharge is set to WIP ,ove! -or4 in process and labor are charged at standard$ There are
no reso&rce rate or e++iciency variances$
The acco&nting entries +or negative ,an&al reso&rce transactions and bac4-ard moves +or WIP
,ove reso&rces are:
Account Debit Credit
Reso&rce absorption acco&nt AA
WIP acco&nting class reso&rce val&ationacco&nt AA
Costin% *abor C#ar%es at Actual
%o& can charge labor charges at act&al in t-o -ays$ %o& can enter an act&al rate +or the
employee &sing the (pen Reso&rce Transaction Inter+ace or -hen yo& de+ine employee rates$
Cor labor charges &sing an act&al or employee rate +or a reso&rce +or -hich charge standard
rate is t&rned o++! the acco&nting entries are:
Account Debit Credit
WIP acco&nting class reso&rce val&ation acco&nt AA
Reso&rce absorption acco&nt AA
57
Any di++erence bet-een the total labor charged at act&al and the standard labor amo&nt is
recogni0ed as an e++iciency variance at period close$
I+ the ?tandard Rates chec4 box is chec4ed and yo& enter an act&al rate +or a reso&rce! the
system charges the *ob or repetitive sched&le at standard$ I+ A&tocharge is set to ,an&al and
act&al rates and 6&antities are recorded! a rate variance is recogni0ed immediately +or
any rate di++erence$ Any 6&antity di++erence is recogni0ed as an e++iciency variance at period
close$
The acco&nting entries +or the act&al labor charges are:
Account Debit Credit
WIP acco&nting class reso&rce val&ation acco&nt AA
Reso&rce rate variance acco&nt .;ebit -hen act&al AA AA
rate is greater than the standard rate$ Credit -hen
the act&al rate is less than the standard rate$/
Reso&rce absorption acco&nt AA
PO Receipt and PO !o$e Transactions
%o& can receive p&rchased items associated -ith o&tside reso&rces +rom an o&tside processing
operation bac4 into -or4 in process in (racle P&rchasing$ Cor these items! Wor4 in Process
creates reso&rce transactions at the standard or act&al rate +or all o&tside reso&rces -ith
an a&tocharge type o+ P( receipt or P( move$ Cor o&tside reso&rces -ith an a&tocharge type o+
P( move! Wor4 in Process also moves the assemblies +rom the '&e&e or R&n intraoperation
step o+ the o&tside processing operation into the '&e&e intraoperation step o+ the next
operation or into the To move intraoperation step i+ the o&tside processing operation is the last
operation on the ro&ting$
I+ yo& assigned internal reso&rces to an o&tside operation -ith an a&tocharge type o+ ,an&al!
charge the reso&rces &sing the Reso&rce Transactions -indo- or the (pen Reso&rce
Transaction Inter+ace$
I+ yo& ret&rn assemblies to the s&pplier &sing the Enter Ret&rns and Ad*&stments -indo- in
(racle P&rchasing! (racle P&rchasing a&tomatically reverses the charges to all a&tomatic
reso&rces associated -ith the operation$ %o& m&st man&ally reverse all man&al reso&rce charges
&sing the Reso&rce Transactions -indo-$ Cor o&tside reso&rces -ith an a&tocharge type o+ P(
move! (racle P&rchasing a&tomatically moves the assemblies +rom the '&e&e intraoperation
step o+ the operation immediately +ollo-ing the o&tside processing operation into the '&e&e
intraoperation step o+ yo&r o&tside processing operation$
I+ the o&tside processing operation is the last operation on the ro&ting! the assemblies
a&tomatically move +rom the To move intraoperation step to the '&e&e intraoperation step$ P(
move reso&rce transactions are applied to m&ltiple repetitive sched&les on a line based on ho-
the assemblies being moved are allocated$ ,oves are allocated across m&ltiple repetitive
sched&les on a +irst in#+irst o&t basis$ P( receipt reso&rce transactions are allocated across
sched&les on a +irst in +irst .CIC(/ o&t basis$
59
Outside Processin% C#ar%es
Wor4 in Process a&tomatically creates reso&rce transactions at the standard or act&al rate +or all
o&tside processing reso&rces -ith an charge type o+ P( Receipt or P( ,ove -hen yo& receive
assemblies +rom an o&tside processing operation bac4 into -or4 in process! &sing the Enter
Receipts -indo- in P&rchasing$ Cor o&tside processing reso&rces -ith an charge type o+ P(
,ove! Wor4 in Process also per+orms a move o+ the assemblies +rom the '&e&e or R&n
intraoperation step o+ yo&r o&tside processing operation into the '&e&e intraoperation step o+
yo&r next operation or into the To move intraoperation step i+ the o&tside processing operation is
the last operation on yo&r ro&ting$
I+ yo& assigned internal reso&rces to an o&tside operation -ith an charge type o+ ,an&al! yo& &se
the ,ove Transactions -indo- or the (pen Reso&rce Transaction Inter+ace to charges these
reso&rces$
I+ yo& ret&rn assemblies to the s&pplier! Wor4 in Process a&tomatically reverses the charges to all
a&tomatic reso&rces associated -ith the operation$ %o& m&st man&ally reverse all man&al
reso&rce charges &sing the ,ove Transactions -indo-$ Cor o&tside processing reso&rces
-ith an charge type o+ P( ,ove! Wor4 in Process a&tomatically moves the assemblies +rom the
'&e&e intraoperation step o+ the operation immediately +ollo-ing the o&tside processing
operation into the '&e&e intraoperation step o+ yo&r o&tside processing operation$
I+ the o&tside processing operation is the last operation on yo&r ro&ting! Wor4 in Process
a&tomatically moves the assemblies +rom the To move intraoperation step to the '&e&e
intraoperation step$ Wor4 in Process applies P( ,ove reso&rce transactions to m&ltiple repetitive
sched&les on a line based on ho- the assemblies being moved are allocated$ Wor4 in Process
allocates moves across m&ltiple repetitive sched&les based on a +irst in#+irst o&t basis$ Wor4 in
Process applies P( Receipt reso&rce transactions to the +irst open repetitive sched&le
on the line$
Costin% Outside Processin% C#ar%es at Standard
When yo& receive the assembly +rom the s&pplier! P&rchasing sends the reso&rce charges to
Wor4 in Process at either standard cost or act&al p&rchase order price! depending &pon ho- yo&
speci+ied the standard rate +or the o&tside processing reso&rce$
I+ the ?tandard Rates option is enabled +or the o&tside processing reso&rce being charged! the
system charges Wor4 in Process at the standard rate and creates a p&rchase price variance +or
the di++erence bet-een the standard rate and the p&rchase order price$ The acco&nting entries +or
o&tside processing items are as +ollo-s:
Account Debit Credit
WIP acco&nting class o&tside processing val&ationacco&nt AA
P&rchase price variance acco&nt .;ebit -hen the AA AA
act&al rate is greater than the standard rate$ Credit
-hen the act&al rate is less than the standard rate$/
(rgani0ation Receiving acco&nt AA
Any 6&antity or &sage di++erence is recogni0ed as an o&tside processing e++iciency variance at
period close$
52
T#e accountin% entries 0or return to supplier 0or outside processin% are:
Account Debit Credit
(rgani0ation Receiving acco&nt AA
P&rchase price variance acco&nt .;ebit -hen AA AA
act&al rate is less than the standard rate$ Credit
-hen the act&al rate is greater than the standard
rate$
WIP acco&nting class o&tside processing val&ation acco&nt AA
Costin% Outside Processin% C#ar%es at Actual Purc#ase Order Price
I+ the ?tandard Rates option is disabled +or the o&tside processing reso&rce being charged! the
system charges Wor4 in Process the p&rchase order price and does not create a p&rchase price
variance$
The acco&nting transactions +or o&tside processing charges at p&rchase order price are as
+ollo-s:
Account Debit Credit
WIP acco&nting class o&tside processing val&ation AA
acco&nt
(rgani0ation Receiving acco&nt AA
Any di++erence +rom the standard is recogni0ed as a reso&rce e++iciency
variance at period close$
O$er#ead C#ar%es
!o$e 1ased O$er#ead C#ar%in%
Wor4 in Process a&tomatically charges appropriate overhead costs as yo& move assemblies
thro&gh the shop +loor$ %o& can charge overheads directly based on move transactions or based
on reso&rce charges$ Cor overheads charged based on move transactions -ith a basis o+ Item!
Wor4 in Process a&tomatically charges overheads &pon completion o+ each assembly in the
operation$ Wor4 in Process a&tomatically reverse these charges d&ring a bac4-ard move
transaction$
Cor overheads based on move transactions -ith a basis o+ <ot! Wor4 in Process a&tomatically
charges overheads &pon completion o+ the +irst assembly in the operation$ Wor4 in Process
a&tomatically reverses these charges d&ring a bac4-ard move transaction i+ it res&lts in 0ero
net assemblies completed in the operation$
Resource 1ased O$er#ead C#ar%in%
Wor4 in Process a&tomatically charges appropriate overhead costs as yo& charge reso&rces$ %o&
can charge overheads based on reso&rce &nits or val&e$ Wor4 in Process a&tomatically reverses
overhead charges -hen yo& reverse the &nderlying reso&rce charge$
Costin% O$er#ead C#ar%es
(verhead charges increase -or4 in process val&ation$ The acco&nting entries +or overhead
charges are:
Account Debit Credit
WIP acco&nting class overhead acco&nt AA
(verhead absorption acco&nt AA
5=
%o& can reverse overhead charges by entering negative ,an&al reso&rce charges or per+orming
bac4-ard moves +or WIP ,ove reso&rces$ The acco&nting entries +or reverse overhead charges
are:
Account Debit Credit
(verhead absorption acco&nt AA
WIP acco&nting class overhead acco&nt AA
Assebly Scrap Transactions
%o& can move partially completed assemblies that yo& consider &nrecoverable to the ?crap
intraoperation step o+ that operation$ .I+ necessary! yo& can recover assemblies +rom scrap by
moving them to another intraoperation step$/ 8y moving into the ?crap intraoperation step! yo&
can e++ectively isolate good assemblies +rom bad$
Wor4 in Process considers a move into the ?crap intraoperation step +rom the '&e&e or R&n o+
the same operation as an operation completion! and th&s &pdates operation completion
in+ormation! bac4+l&shes components! and charges reso&rce and overhead costs
according to the elemental cost set&p$
%o& can also move assemblies bac4 to the ?crap intraoperation step o+ the previo&s operation +or
'&e&e or R&n i+ no -or4 has been completed at the c&rrent operation$
Costin% Assebly Scrap Transactions
When yo& de+ine Wor4 in Process parameters! yo& can speci+y -hether moves into the ?crap
intraoperation step re6&ire a scrap acco&nt$ I+ yo& enter a scrap acco&nt or alias -hen yo& move
assemblies into ?crap! the scrap acco&nt is debited and the *ob or repetitive sched&le elemental
acco&nts +or the standard cost o+ the assembly thro&gh the scrap operation are credited$ This
removes the cost o+ the scrapped assemblies +rom the *ob or repetitive sched&le$ I+ yo& do not
enter a scrap acco&nt or select an alias! the cost o+ the scrap remains in the *ob (r sched&le &ntil
*ob or period close$ I+ yo& recover assemblies +rom scrap! the scrap acco&nt is credited and the
*ob or repetitive sched&le elemental acco&nts +or the standard cost o+ this assembly thro&gh this
operation are debited$
The acco&nting entries +or scrap transactions are:
Account Debit Credit
?crap acco&nt AA
WIP acco&nting class val&ation AA
acco&ntsOstandard
T#e accountin% entries 0or re$erse scrap transactions are:
Account Debit Credit
WIP acco&nting class val&ation acco&ntsOstandard AA
?crap acco&nt AA
Assebly Copletion Transactions
@se the Completion Transactions -indo-! ,ove Transactions -indo-! and Inventory Transaction
Inter+ace to move completed assemblies +rom -or4 in process into s&binventories$ Completion
transactions relieve the val&ation acco&nt o+ the acco&nting class and charge the s&binventory
acco&nts .+or example! +inished goods/ based &pon the assembly:s elemental cost str&ct&re$
Costing Assembly Completion Transactions Completions decrease -or4 in process val&ation and
increase inventory val&ation at standard costs$
7"
The acco&nting entries +or completion transactions are:
Account Debit Credit
?&binventory elemental acco&nts AA
WIP acco&nting class val&ation acco&nts AA
Earnin% Assebly !aterial O$er#ead on Copletion
%o& can assign overheads based on Item! <ot or Total Fal&e basis$ Cor standard discrete *obs
and repetitive sched&les! yo& can earn these overheads as yo& complete assemblies +rom -or4
in process to inventory$
T#e accountin% entries 0or aterial o$er#ead on copletion transactions 0or standard
discrete 'obs and repetiti$e sc#edules are:
Account Debit Credit
?&binventory material overhead acco&nt AA
Inventory material overhead absorption AA
Acco&nt
@se non#standard expense *obs +or s&ch activities as repair and maintenance$ @se non#standard
asset *obs to &pgrade assemblies! +or teardo-n! and to prototype prod&ction$ Don#standard
discrete *obs do not earn overhead on completion$ ?ince yo& have already earned overhead to
prod&ce the assemblies as yo& are repairing or re-or4ing! Wor4 in Process prevents yo& +rom
do&ble earning material overhead on these assemblies$
T#e accountin% entries 0or aterial o$er#ead on copletion transactions 0or non
standard e2pense and nonstandard asset 'obs are:
Account Debit Credit
?&binventory material overhead acco&nt AA
WIP acco&nting class material overhead acco&nt AA
9ob Close Transactions
@ntil yo& close a *ob! or change the stat&s o+ the *ob to Complete # Do Charges! yo& can ma4e
material! reso&rce! and scrap charges to the *ob$ Closing a discrete *ob prevents any +&rther
activity on the *ob$
Costin% 9ob Close Transactions
Wor4 in Process recogni0es variances -hen yo& close a *ob$ The act&al close date yo& speci+y
determines the acco&nting period Wor4 in Process &ses to recogni0e variances$ %o& can bac4
date the close to a prior open period i+ desired$ The close process -rites o++ the balances
remaining in the WIP elemental val&ation acco&nts to the elemental variance acco&nts yo&
de+ined by acco&nting class! leaving a 0ero balance remaining in the closed *ob$
I0 t#ere is a positi$e balance in t#e 'ob at t#e end o0 t#e close& t#e accountin% entries 0or a
'ob close are:
Account Debit Credit
WIP acco&nting class variance acco&nts AA
WIP acco&nting class val&ation acco&nts AA
71
Period Close Transactions
The period close process in Inventory recogni0es variances +or non#standard expense *obs and
repetitive sched&les$ It also trans+ers the -or4 in process period costs to the general ledger$
Costin% NonStandard E2pense 9ob Period Close Transactions
%o& can close discrete *obs and recogni0e variances +or non#standard expense *obs at any time$
In addition! the period close process a&tomatically recogni0es variances on all non#standard
expense *ob charges inc&rred d&ring the period$ There+ore! open non#standard expense *obs
have 0ero WIP acco&nting balances at the start o+ a ne- period$
I+ there is a positive balance in the *ob at the end o+ the period! the acco&nting entries +or non#
standard expense *obs at period close are:
Account Debit Credit
WIP acco&nting class variance acco&nts AA
WIP acco&nting class val&ation acco&nts AA
Costin% Repetiti$e Sc#edule Period Close Transactions
%o& do not close a repetitive sched&le$ Go-ever! yo& do recogni0e variances on a period basis
that res&lt in 0ero WIP acco&nting balances at the start o+ the ne- period$ %o& sho&ld chec4 yo&r
transactions and balances &sing the Repetitive Fal&e Report be+ore yo& close a period$
When yo& de+ine Wor4 in Process parameters! yo& can speci+y -hich repetitive sched&le
variances yo& recogni0e -hen yo& close an
acco&nting period$ %o& can either recogni0e variances +or all repetitive sched&les -hen yo& close
an acco&nting period! or recogni0e variances +or those repetitive sched&les -ith stat&ses o+ either
Complete # Do Charges or Cancelled$
Ass&ming positive balances in the repetitive sched&les at the end o+ the period! the acco&nting
entries +or repetitive sched&les at period close are:
Account Debit Credit
WIP acco&nting class variance acco&nts AA
WIP acco&nting class val&ation acco&nts AA
Wor4 in Process ?tandard Cost @pdate Transactions
The standard cost &pdate process reval&es standard and non#standard asset discrete *obs and
&pdates pending costs to +ro0en standard costs$ Repetitive sched&les and non#standard expense
*obs do not get reval&ed by the cost &pdate$
The cost &pdate creates acco&nting transactions by *ob and cost element val&ation acco&nt$
Each standard and non#standard asset discrete *ob is &pdated &sing the +ollo-ing +orm&la:
Standard cost update ad'ustent A Hne5 costs in (aterial& resource& outside processin%&
and o$er#ead c#ar%es)I ne5 costs out (scrap and assebly copletion c#ar%es)J - Hold
costs in (aterial& resource& outside processin%& and o$er#ead c#ar%es) I old costs out
(scrap and assebly copletion c#ar%es)J
7)
I+ the res&lt o+ the cost &pdate is an increase in the standard cost o+ the *ob! the acco&nting
entries +or a cost &pdate transaction are:
Account Debit Credit
WIP acco&nting class val&ation acco&nts AA
WIP ?tandard cost ad*&stment acco&nt AA
I+ the res&lt o+ the cost &pdate is a decrease in the standard cost o+ the *ob! the acco&nting entries
+or a cost &pdate transaction are:
Account Debit Credit
WIP ?tandard cost ad*&stment acco&nt AA
WIP acco&nting class val&ation acco&nts AA
When the cost &pdate occ&rs +or open *obs! standards and WIP balances are reval&ed according
to the ne- standard! th&s retaining relie+ variances inc&rred &p to the date o+ the &pdate$
71
Standard Cost 4aluation
Inventory and Wor4 in Process contin&ally &pdate inventory val&e -ith each transaction$ Wor4 in
Process balances are &pdated -ith each related acco&nting transaction$ Inventory s&binventory
val&es may be reported -hen the 6&antity movement occ&rs$
4alue by Cost Eleent
Inventory or -or4 in process val&e is maintained and reported on by distinct cost element .s&ch
as material! material overhead! and so on/! even i+ yo& assign the same general ledger val&ation
acco&nt to each cost element$ %o& can also report -or4 in process val&e by cost element -ithin
speci+ic WIP acco&nting classes$
Standard Costin%
@nder standard costing! the val&e o+ inventory is determined &sing the material and material
overhead standard costs o+ each inventory item$ I+ yo& &se 8ills o+ ,aterial! Inventory maintains
the standard cost by cost element .material! material overhead! reso&rce! o&tside processing!
and overhead/$
/nliited Cost Types
%o& can de+ine an &nlimited n&mber o+ cost types and &se them -ith any inventory val&ation and
margin analysis reports$ This allo-s yo& to see the potential e++ects o+ a cost roll&pE&pdate$ %o&
can also &pdate yo&r standard costs +rom any o+ the cost types yo& have de+ined$ When yo& &se
8ills o+ ,aterial -ith Inventory! yo& can speci+y the cost type in explosion reports and report these
costs +or sim&lation p&rposes
7
In$entory and BorC in Process Standard Cost 4ariances
This section describes Inventory standard cost variances and Wor4 in Process standard cost
variances$
In$entory Standard Cost 4ariances
In general! Inventory records p&rchase price variance .PPF/ and recogni0es cycle co&nt and
physical inventory ad*&stments as variances$
Purc#ase Price 4ariance (PP4)
;&ring a p&rchase order receipt! Inventory calc&lates p&rchase price variance$ In general! this is
the di++erence bet-een -hat yo& pay the s&pplier and the item:s standard cost$ Inventory
calc&lates this val&e as +ollo-s:
PP4 A (PO unit price standard unit cost) I @uantity recei$ed(
Inventory &pdates the p&rchase price variance acco&nt -ith the PPF val&e$ I+ the p&rchase order
price is in a +oreign c&rrency! Inventory converts it into the +&nctional c&rrency o+ the inventory
organi0ation and calc&lates the p&rchase price variance$ P&rchasing reports PPF &sing the
P&rchase Price Fariance Report$ %o& distrib&te this variance to the general ledger -hen yo&
per+orm the general ledger trans+er! or period close$
In$oice Price 4ariance (IP4)
In general! invoice price variance is the di++erence bet-een the p&rchase price and the invoice
price paid +or a p&rchase order receipt$ P&rchasing reports invoice variance$ @pon invoice
approval! Payables a&tomatically records Invoice Price Fariance! to both invoice price
variance and exchange rate variance acco&nts$
Cycle Count and P#ysical In$entory
Inventory considers cycle co&nt and physical inventory ad*&stments as variance$ %o& distrib&te
these variances to the general ledger -hen yo& per+orm the general ledger trans+er or period
close$
BorC in Process Standard Cost 4ariances
Wor4 in Process provides &sage! e++iciency! and standard cost ad*&stment variances$
/sa%e and E00iciency 4ariances
@sage and e++iciency variances res&lt -hen the total costs charged to a *ob or sched&le do not
e6&al the total costs relieved +rom a *ob or sched&le at standard$ Charges occ&r +rom iss&es and
ret&rns! reso&rce and overhead charges! and o&tside processing receipts$ Cost relie+ occ&rs +rom
assembly completions! scrap transactions! and close transactions$
%o& can vie- these variances in the ;iscrete >ob Fal&e report! the Repetitive Fal&e report! and
by &sing the WIP Fal&e ?&mmary -indo-$
Wor4 in Process reports &sage and e++iciency variances as yo& inc&r them! b&t does not &pdate
the appropriate variance acco&nts &ntil yo& close a *ob or period$ Wor4 in Process &pdates the
standard cost ad*&stment variance acco&nt at cost &pdate$
@sage and e++iciency variances are primarily 6&antity variances$ They identi+y the di++erence
bet-een the amo&nt o+ material! reso&rces! o&tside processing! and overheads re6&ired at
standard! and the act&al amo&nts yo& &se to man&+act&re an assembly$ E++iciency variance can
75
also incl&de rate variance as -ell as 6&antity variance i+ yo& charged reso&rces or o&tside
processing at act&al$
%o& can calc&late and report &sage and e++iciency variances based on planned start 6&antity or
the act&al 6&antity completed$ %o& can &se the planned start 6&antity to chec4 potential variances
d&ring the *ob or repetitive sched&le$ %o& can &se the act&al 6&antity completed to
chec4 the variances be+ore the *ob or period close$ %o&r choice o+ planned start 6&antity or act&al
6&antity completed determines the standard re6&irements$ These standard re6&irements are
compared to the act&al material iss&es! reso&rce! o&tside processing! and overhead charges to
determine the reported variance$
Wor4 in Process calc&lates! reports! and recogni0es the +ollo-ing 6&antity variances:
!aterial /sa%e 4ariance
The material &sage variance is the di++erence bet-een the act&al material iss&ed and the
standard material re6&ired to b&ild a given assembly! calc&lated as +ollo-s:
standard aterial cost I (@uantity issued I @uantity re@uired)
This variance occ&rs -hen yo& over or &nder iss&e components or &se an alternate bill$
Resource and Outside Processin% E00iciency 4ariance
The reso&rce and o&tside processing e++iciency variances is the di++erence bet-een the reso&rces
and o&tside processing charges inc&rred and the standard reso&rce and o&tside processing
charges re6&ired to b&ild a given assembly! calc&lated as +ollo-s:
.applied reso&rce &nits A standard or act&al rate/ L .standard reso&rce &nits at standard reso&rce
rate/
This variance occ&rs -hen yo& &se an alternate ro&ting! add ne- operations to a standard
ro&ting d&ring prod&ction! assign costed reso&rces to Do # direct charge operations s4ipped by
shop +loor moves! overcharge or &ndercharge a reso&rce! or charge a reso&rce at
act&al$
!o$e 1ased O$er#ead E00iciency 4ariance
,ove based overhead e++iciency variance is the di++erence bet-een overhead charges inc&rred
+or move based overheads .overhead basis o+ Item or <ot/ and standard move based overheads
re6&ired to b&ild a given assembly! calc&lated as +ollo-s:
applied o$e based o$er#eads I standard o$e based o$er#eads
This variance occ&rs -hen yo& &se an alternate ro&ting! add operations to a standard ro&ting
d&ring prod&ction! or do not complete all the move transactions associated -ith the assembly
6&antity being b&ilt$
Resource 1ased O$er#ead E00iciency 4ariance
Reso&rce based overhead e++iciency variance is the di++erence bet-een overhead charges
inc&rred +or reso&rce based overheads .overhead basis o+ Reso&rce &nits or Reso&rce val&e/
and standard reso&rce based overheads re6&ired to b&ild a given assembly! calc&lated as
+ollo-s:
applied resource based o$er#eads I standard resource based o$er#eads
77
This variance occ&rs -hen yo& &se an alternate ro&ting! add ne- operations to a standard
ro&ting d&ring prod&ction! assign costed reso&rces to Do # direct charge operations s4ipped by
shop +loor moves! overcharge or &ndercharge a reso&rce! or charge a reso&rce at act&al$
Standard Cost Ad'ustent 4ariance
?tandard cost ad*&stment variance is the di++erence bet-een costs at the previo&s standards and
costs at the ne- standards created by cost &pdate transactions$
79
?tandard and Average Costing Compared
Cost ,anagement o++ers t-o costing methods: standard costing and average costing$
Average costing is &sed primarily +or distrib&tion and other ind&stries -here the prod&ct cost
+l&ct&ates rapidly! or -hen dictated by reg&lation and other ind&stry conventions$
Average costing allo-s yo& to:
val&e inventory at a moving average cost
trac4 inventory and man&+act&ring costs -itho&t the re6&irement o+ having prede+ined
standards
determine pro+it margin based on an Qact&alR cost method
meas&re the organi0ation:s per+ormance against historical costs
incl&de all direct costs o+ man&+act&ring an item in that item:s inventory cost
@se standard costing +or per+ormance meas&rement and cost control$ ?tandard costing
allo-s yo& to:
val&e inventory at a predetermined cost
determine pro+it margin based on pro*ected costs
record variances against expected costs
&pdate standard costs +rom any cost type
eval&ate prod&ction costs relative to standard costs
meas&re the organi0ation:s per+ormance based on prede+ined prod&ct costs
eval&ate prod&ct costs to assist management decisions
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@nder average costing! yo& cannot share costs$ Average costs are maintained separately in each
organi0ation$ @nder standard costing i+ yo& &se Inventory -itho&t Wor4 in Process!yo& can de+ine
yo&r item costs in the organi0ation that controls yo&r costs and share those costs across
organi0ations$ I+ yo& share standard costs across m&ltiple organi0ations! all reports! in6&iries! and
processes &se those costs$ %o& are not re6&ired to enter d&plicate costs$
Dote: The organi0ation that controls yo&r costs can be a man&+act&ring organi0ation that &ses
Wor4 in Process or 8ills o+ ,aterial$ (rgani0ations that share costs -ith the organi0ation that
controls yo&r costs cannot &se 8ills o+ ,aterial$
4aluation Accounts and Cost Eleents 5it# A$era%e Costin%
The system maintains the average &nit cost at the organi0ation levelS it does not &se any
s&binventory val&ation acco&nts$ I+ yo& had separate val&ation acco&nts by s&binventory! total
inventories -o&ld balance! b&t acco&nt balances by s&binventory -o&ld not match the inventory
val&ation reports$
Dote: Cost ,anagement en+orces the same acco&nt n&mber +or organi0ation level material and
intransit acco&nts$ (ther-ise the balances o+ inventory val&ation reports do not
e6&al the s&m o+ acco&nting transactions$
C#an%in% 0ro Standard to A$era%e Costin%
(nce transactions have been per+ormed yo& cannot change the costing method o+ an
organi0ation in the (rgani0ation Parameters -indo- in (racle Inventory$
Gome
7=
Recei$ables
Acco&nting +or Transactions
This essay describes the acco&nting entries created -hen yo& enter transactions in Receivables
&sing the Accr&al method o+ acco&nting$
In$oices
When yo& enter a reg&lar invoice thro&gh the Transaction -indo-! Receivables creates the
+ollo-ing *o&rnal entry:
DR Receivables
CR Revenue
CR Tax (If you charge tax)
CR Freight (If you charge freight)
I+ yo& enter an invoice -ith a 8ill in Arrears invoicing r&le! Receivables creates the +ollo-ing
*o&rnal entry:
In t#e 0irst period o0 Rule:
DR Unbilled Receivables
CR Revenue
In all periods o0 Rule:
DR Receivables
CR Unbilled Receivables
CR Tax (If you charge tax)
CR Freight (If you charge freight)
I+ yo& enter an invoice -ith a 8ill in Advance invoicing r&le! Receivables creates the +ollo-ing
*o&rnal entries:
DR Receivables
CR Unearned Revenue
CR Tax (If you charge tax)
CR Freight (If you charge freight)
DR Unearned Revenue
CR Revenue
Receivables &ses the Creight! Receivable! Reven&e! ?&spense! Tax! @nbilled Receivable! and
@nearned Reven&e acco&nts that yo& speci+ied in yo&r A&toAcco&nting str&ct&re$
Credit !eos
When yo& credit an invoice! debit memo! or chargebac4 thro&gh the Credit ,emos -indo-!
Receivables creates the +ollo-ing *o&rnal entry:
DR Revenue
DR Tax (if you credit tax)
DR Freight (if you credit freight)
CR Receivables
9"
When yo& credit a commitment! Receivables creates the +ollo-ing *o&rnal entries:
DR Revenue
CR Receivables
When yo& enter a credit memo against an installment! Receivables lets yo& choose bet-een the
+ollo-ing methods: <IC(! CIC(! and Prorate$
When yo& enter a credit memo against an invoice -ith invoicing and acco&nting r&les!
Receivables lets yo& choose bet-een the +ollo-ing methods:
<IC(! Prorate! and @nit$
I+ the pro0ile option /se In$oice Accountin% 0or Credit !eos is set to "es! Receivables
credits the acco&nts o+ the original transaction$ I+ t#is pro0ile option is set to No! Receivables
&ses A&toAcco&nting to determine the Creight! Receivables Reven&e! and Tax acco&nts$
Receivables &ses the acco&nt in+ormation +or on#acco&nt credits thatyo& speci+ied in yo&r
A&toAcco&nting str&ct&re$ Receivables let yo& &pdate acco&nting in+ormation +or yo&r credit
memo a+ter it has posted to yo&r general ledger$
Receivables 4eeps the original acco&nting in+ormation as an a&dit trail -hile it creates an
o++setting entry and the ne- entry$
Coitents
Deposits
When yo& enter a deposit! Receivables creates the +ollo-ing *o&rnal entry:
DR Receivables (Deposit)
CR Unearned Revenue
These acco&nts come +rom the deposit:s transaction type$ When yo& enter an invoice against this
deposit! Receivables creates the +ollo-ing *o&rnal entries:
DR Receivables (Invoice)
CR Revenue
CR Tax (If you charge tax)
CR Freight (If you charge freight)
DR Unearned Revenue
CR Receivables (Invoice)
When yo& apply an invoice to a deposit! Receivables creates a receivable ad*&stment against the
invoice$ Receivables &ses the acco&nt in+ormation yo& speci+ied in yo&r A&toAcco&nting
str&ct&re$ When cash is received against this deposit! Receivables creates the
+ollo-ing *o&rnal entry:
DR Cash
CR Receivables (Deposit)
91
.uarantees
When yo& enter a g&arantee! Receivables creates the +ollo-ing *o&rnal entry:
DR Unbilled Receivables
CR Unearned Revenue
These acco&nts come +rom the g&arantee:s transaction type$When yo& enter an invoice against
this g&arantee! Receivables creates the +ollo-ing *o&rnal entry:
DR Receivables (Invoice)
CR Revenue
CR Tax (If you charge tax)
CR Freight (If you charge freight)
DR Unearned Revenue
CR Unbilled Receivables
When yo& apply an invoice to a g&arantee! Receivables creates a receivable ad*&stment against
the g&arantee$ These acco&nts come +rom yo&r g&arantee:s transaction type$
When cash is received against this g&arantee! Receivables creates the +ollo-ing *o&rnal entry:
DR Cash
CR Receivables (Invoice)
Receipts
When yo& enter a receipt and +&lly apply this receipt to an invoice! Receivables creates the
+ollo-ing *o&rnal entry:
DR Cash
CR Receivables
When yo& enter an &napplied receipt! Receivables creates the +ollo-ing *o&rnal entry:
DR Cash
CR Unapplied
When yo& enter an &nidenti+ied receipt! Receivables creates the +ollo-ing *o&rnal entry:
DR Cash
CR Unidentified
When yo& enter an on#acco&nt receipt! Receivables creates the +ollo-ing *o&rnal entry:
DR Cash
CR OnAccount
When yo&r receipt incl&des a disco&nt! Receivables creates the +ollo-ing *o&rnal entry:
DR Receivables
CR Revenue
DR Cash
CR Receivables
DR Earned/Unearned Discount
CR Receivables
9)
Receivables &ses the de+a&lt Cash! @napplied! @nidenti+ied! (n#Acco&nt! @nearned! and Earned
acco&nts that yo& speci+ied in the Remittance 8an4s -indo- +or this receipt class$ When yo&
enter a receipt and combine it -ith an on#acco&nt credit! Receivables creates the +ollo-ing
*o&rnal entry:
DR Cash
CR Receivables (Invoice)
DR OnAccount
CR Receivables (Invoice)
When yo& enter a receipt and combine it -ith a negative ad*&stment! Receivables creates the
+ollo-ing *o&rnal entries:
DR Cash
CR Receivables (Invoice)
DR WriteOff
CR Receivables (Invoice)
%o& set &p a Write # (++ acco&nt -hen de+ining yo&r Receivables Activity$
When yo& enter a receipt and combine it -ith a positive ad*&stment! Receivables creates the
+ollo-ing *o&rnal entries:
DR Cash
CR Receivables (Invoice)
DR Receivables (Invoice)
CR WriteOff
When yo& enter a receipt and combine it -ith a Chargebac4! Receivables creates the +ollo-ing
*o&rnal entries:
DR Cash
CR Receivables (Invoice)
DR Receivables (Chargeback)
CR Receivables (Invoice)
DR Chargeback
CR Receivables (Chargeback)
%o& set &p a Chargebac4 acco&nt -hen de+ining yo&r Receivables Activity$
Remittances
When yo& create a receipt that re6&ires remittance to yo&r ban4! Receivables debits the
Con+irmation acco&nt instead o+ Cash$ An example o+ a receipt re6&iring remittance -o&ld be a
chec4 be+ore it -as cashed$ Receivables creates the +ollo-ing *o&rnal entry -hen yo& enter s&ch
a receipt:
DR Confirmation
CR Receivables
%o& can then remit the receipt to yo&r remittance ban4 &sing one o+ the t-o remittance methods:
?tandard or Cactoring$ I+ yo& remit yo&r receipt &sing the standard method o+ remittance!
Receivables creates the +ollo-ing *o&rnal entry:
91
DR Remittance
CR Confirmation
When yo& clear the receipt! Receivables creates the +ollo-ing *o&rnal entry:
DR Cash
DR Bank Charges
CR Remittance
I+ yo& remit yo&r receipt &sing the +actoring remittance method! Receivables creates the +ollo-ing
*o&rnal entry:
DR Factor
CR Confirmation
When yo& clear the receipt! Receivables creates a short term liability +or receipts -hich mat&re at
a +&t&re date$ The +actoring process let yo& receive cash be+ore the mat&rity date! and ass&mes
that yo& are liable +or the receipt amo&nt &ntil the c&stomer pays the balance on mat&rity
date$ When yo& receive payment! Receivables creates the +ollo-ing *o&rnal entry:
DR cash
DR Bank Charges
CR Short Term Debt
(n the mat&rity date! Receivables reverses the short term liability and creates the +ollo-ing
*o&rnal entry:
DR Short Term Debt
CR Factor
Ad'ustents
When yo& enter a negative ad*&stment against an invoice! Receivables creates the +ollo-ing
*o&rnal entry:
DR WriteOff
CR Receivables (Invoice)
When yo& enter a positive ad*&stment against an invoice! Receivables creates the +ollo-ing
*o&rnal entry:
DR Receivables (Invoice)
CR WriteOff
Debit !eos
When yo& enter a debit memo in the Transaction -indo-! Receivables creates the +ollo-ing
*o&rnal entries:
DR Receivables
CR Revenue (If you enter line amounts)
CR Tax (If you charge tax)
CR Freight (If you charge freight)
DR Receivables
CR Finance Charges
9
OnAccount Credits
When yo& enter an on#acco&nt credit in the Credit ,emo or the Transaction -indo-! Receivables
creates the +ollo-ing *o&rnal entry:
DR Revenue (If you credit line amounts)
DR Tax (If you credit tax)
DR Freight (If you credit freight)
CR Receivables
Receivables &se the Creight! Receivable! Reven&e! and Tax acco&nts that yo& speci+ied in yo&r
A&toAcco&nting str&ct&re$
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