Вы находитесь на странице: 1из 12

Accounting entries for the Asset Life Cycle

Posted on December 12th, 2010 by Sanjit Anand | Print This Post | Email This Post Have you tried OracleappsHub in ipad/iphone/smart Phone? Don't wait. try it today Finally am able to put the detailed accounting entries for the Asset Cycle. As highlighted in one of the post Oracle Assets creates journal entries for the following general ledger accounts: 1. Asset Cost 2. Asset Clearing 3. Depreciation Expense 4. Accumulated Depreciation 5. Revaluation Reserve 6. Revaluation Amortization 7. CIP Cost 8. CIP Clearing 9. Proceeds of Sale Gain, Loss, and Clearing 10. Cost of Removal Gain, Loss, and Clearing 11. Net Book Value Retired Gain and Loss 12. Intercompany Payables 13. Intercompany Receivables 14. Deferred Accumulated Depreciation 15. Deferred Depreciation Expense 16. Depreciation Adjustment The setup of these accounts is done while you defining the asset books as per below. The number for above accounts can usually map it with Oracle seeded screen of setup;.

Fig 1: Accounts and accounting in Fixed Assets

Fig 2: Accounts and accounting in Fixed Assets Next we will see the different accounting at various transactional events. Depreciation Accounting Whenever you run depreciation, Oracle Assets creates accounting entry with your accumulated depreciation accounts and your depreciation expense accounts. Oracle Assets creates separate journal entries for current period depreciation expense and for adjustments to depreciation expense for prior period transactions and changes to financial information.

Oracle Assets creates the following journal entries for a current period depreciation charge of AU$ 200:

Current and Prior Period Addition Read this previous post on mass addition: The recoverable cost is AU$ 4,000 and the method is straight-line 4 years. You purchase and place the asset into service in Year 1, Quarter 1.

You place an asset in service in Year 1, Quarter 1, but you do not enter it into Oracle Assets until Year 2, Quarter 2. Your payables system creates the same journal entries to asset clearing and accounts payable liability as for a current period addition.

Merge Mass Additions When you merge two mass additions, Oracle Assets adds the asset cost of the mass addition that you are merging to the asset account of the mass addition you are merging into. Oracle Assets records the merge when you perform the transaction. Oracle Assets does not change the asset clearing account journal entries it creates for each line, so each of the appropriate

clearing accounts clears separately.

Construction-In-Process (CIP) Addition You add a CIP asset. (CIP assets do not depreciate )

Capitalization Once you decide that a CIP asset is completed you can capitalize it very easily. Navigation: Assets > Capitalize CIP Assets A capitalization transaction is similar to an addition transaction: you place the asset in service so you can begin depreciating it. When you capitalize an asset in the period you added it, Oracle Assets creates the following journal entries:

When you capitalize an asset in a period after the period you added it, Oracle Assets creates journal entries that transfer the cost from the CIP cost account to the asset cost account. The clearing account has already been cleared.

Deleted Mass Additions Oracle Assets creates no journal entries for deleted mass additions and does not clear the asset clearing accounts credited by accounts payable. You clear the accounts by either reversing the invoice in your payables system, or creating manual journal entries in your general ledger. Asset Type Adjustments If you change the asset type from capitalized to CIP, Oracle Assets creates journal entries to debit the CIP cost account and credit the asset clearing account. Oracle Assets does not create capitalization or reverse capitalization journal entries for CIP reverse transactions.

Cost Adjustments to Assets Understand this way, you placed an asset in service in Year 1, Quarter 1. The recoverable cost is AU$4,000. The life of your asset is 4 years, and you are using straight-line depreciation. In Year 1, Quarter 4, you receive an additional invoice for the asset and change the recoverable cost to AU$4,800.

Expense will go at it:

Amortized

Reinstatement Current Period Reinstatement

Reclassification Read these post for greatest details Reclassification of assets Asset Reclass Programmatically

When you reclassify an asset from office equipment to computers in Year 1, Quarter 3. The asset cost is AU$4,000, the life is 4 years, and you are using straight-line depreciation

Transfer Asset Read this earlier post on asset transfer .

In Year 2, Quarter 2, you transfer the asset from cost center 100 to cost center 200 in the current period

In Year 3, Quarter 4, you transfer the asset from the ABC Manufacturing Company to the XYZ Distribution Company.

you place the same AU$4,000 asset in service with two units assigned to cost center 100. In Year 2, Quarter 3, you realize the asset actually has four units, two of which belong to cost center 200. If all units remain in the original cost center, Oracle Assets does not create any journal entries.

Take a note, majority of case the accounting entry happen when you run Create Journal or create accounting .Hope this helps.:)

Deep Drive : Depreciation in Oracle Fixed Asset


Posted on October 15th, 2007 by Sanjit Anand | Print This Post | Email This Post Have you tried OracleappsHub in ipad/iphone/smart Phone? Don't wait. try it today What is Depreciation? Procedure to use for calculating depreciation and create journals that will be posted to the General Ledger. This is also to be used to close the period. The depreciation program calculates depreciation expense and adjustments, and updates the accumulated depreciation and year-to-date depreciation. When we run depreciation, the depreciation program submits three separate requests to: Calculate gains and losses for retired assets and catch up depreciation for retired and reinstated assets

Calculate depreciation expense and adjustments for the period, and close the current period Run the reserve ledger report Depreciation expense is calculated as follows: < STRONG >

Depreciation Expense = (Current Cost - Recoverable Cost) * Basic Rate< /FONT > What is RollBack Depreciation? This is used to reverse the following processes: 1. Calculated depreciation in Fixed Assets 2. Created journal in Fixed Assets 3. Posted journal in General Ledger What is Forecast Depreciation? Oracle Assets estimates depreciation expense for the periods for which you project depreciation based on the financial information for your existing assets at the start of that period. The projection includes additions, transfers, and reclassification transactions you perform in the current period. It ignores other asset transactions you make in the current period, such as the depreciation adjustment for retroactive additions and retroactive transfers you enter in the current period. The program also ignores fully reserved and fully retired assets. Depreciation projections are estimates of actual depreciation expense. You can project depreciation expense for any depreciation book. The standard depreciation process in EBS Depreciation computations depend on such factors as the type of depreciation (Life, units of production, or flat rate), the depreciation life and the depreciation method. The asset category specifies a default depreciation method to be used with an asset. You will usually want to set up categories in such a way that you do not need to override the defaults they establish. This is oracle standard Depreciation Process.

Overview of the Process Prior to running the Deprecation process you have to unsure that these reports submission is completed. Select Depreciation from the navigation menu and then select Calculate Gains and Losses. Here oracle Assets will automatically run this report when Depreciation is ran, but the forecast report will not be accurate if their are any retirements pending. Run the Projections report which will project depreciation expense for a specific depreciation book. Use this report to review project depreciation expense for your assets for each book you request. This report is sorted by, and prints the total depreciation for each balancing segment, cost center, and expense account. You can request asset detail at the Cost Center and/or Asset level.

Step 1.0 :Run depreciation on corporate book. The depreciation program automatically calculates gains and losses for unprocessed retirements, calculates depreciation expense and depreciation adjustments, and generates the appropriate Reserve Ledger and Journal Entry Reserve Reports . Ensure that the close period box is unchecked. This 'trial' run enables an opportunity to review depreciation calculations and work any errors prior to running your final period depreciation.

Step 2.0 : Run Create Journal This process creates all of the depreciation, transfer, reclassification, capitalization, addition, adjustment and retirement journal entries for all of the transactions within the asset subledger. It also transfers these journals to the general ledger once they have been created. Please take a note oracle Assets journals updated the GL tables rather than the GL interface tables. Step 3.0 : Reconcile FA sub-ledger to the General Ledger and Accounts Payable Using the Period Close reports reconcile the FA Clearing, Cost and Depreciation amounts to the appropriate GL accounts. To reconcile the cost accounts with GL, you can run the cost summary and cost detail report. The summary report can only be sorted by balancing segment and asset account. A detail (by asset) version is also available for these reports. Depreciation expense reconciliation can be done using the Journal Entry Reserve Ledger report. This report provides details on all active assets in addition to those assets that you might have retired during the year. Run GL Accounts Analysis Report for details on GL transaction activities for reconciling any account balance discrepancies.

If we are happy with the reports we can go ahead to Run the Depreciation Process again (Step 4.0) otherwise, we will perform these processes;

Sub Step 3.a Rollback Journals Sub Step 3.b Rollback Depreciation Sub step 3.c Necessary adjustments and for rewind the whole process again

Step 4.0 :Run the Depreciation Process Again Once you are satisfied with the reconciliation, the process with the close period box checked, the process closes the current depreciation period and opens the next period calendar. Step 5.0 :Copy transactions to tax books This process copies the transaction that occurred in the corporate book during a period to a tax book using the Periodic Mass Copy functionality as opposed to the Initial Mass copy. The timing of the Periodic Mass Copy process will depend on what type of calendar has been assigned to the Tax Book. If it's Monthly, then the copy process should occur each month after the Corp Book is closed. Step 6.0 :Run these reports for the verification of the Copy Process 1. The Tax Addition Report shows you asset additions and capitalization for the period range you selected. The report is sorted by Balancing Segment, Fiscal Year Added, Asset Account, and Asset Number. It prints totals for Asset Account, Fiscal Year, and Balancing Segment. 2. The Financial Adjustments Report shows you all of the adjustments you made to the financial information for your assets for the Book and Period you choose. Asset Number sorts the report and by when the transaction was effective. 3. The Tax Retirements Report shows you all the Gains and Losses and any Investment Tax Credit (ITC) Recapture for your asset retirements. This report sorts by Balancing Segment, Fiscal Year Placed in Service Date, Asset Account, and Asset Number. The report prints totals for each Fiscal Year and Balancing Segment. These three reports provide all the details on Assets copied from Mass Copy.

Step 7.0 :Run depreciation on tax books. Depreciation is calculated separately on each tax book according to the depreciation methods and life defined for each tax book. The same process for running tax depreciation applies as detailed in Step 1.0 discussed above. Step 5 to 7 is required if your company is maintaining tax books, else this become optional.