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Asset Retirements

Release 12 Oracle Asset Management Fundamentals

Copyright 2007, Oracle. All


All rights
rights reserved.
reserved.

Objectives

After completing this module, you should be able to do


the following:
Discuss how asset retirements fits within the
Oracle Assets process
Explain the necessity of tracking asset retirements
and proper recording of accounting transactions
Discuss the Calculate Gains and Losses program
and its role in asset retirements
Discuss the ability to reinstate asset retirements

Copyright 2007, Oracle. All rights reserved.

Agenda

Tracking Asset Retirements


Full and Partial Asset Retirements
Mass Asset Retirements
External Retirements
Reinstating Retirements
Accounting for Retirements
Retirement Reports

Copyright 2007, Oracle. All rights reserved.

Tracking Asset Retirements


Automated
addition

Asset Life

Manual
addition

Invoice
Transfer

Adjustment

Depreciation
Create
journal entries
Copyright 2007, Oracle. All rights reserved.

Overview of Retiring an Asset


Asset to retire

Full retirement

Partial retirement

Entire units and entire cost

Partial unit

Retired asset

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Partial cost

Restrictions on Retirements and Reinstatements

Desired Action

Can Be Performed When

Retire an asset

The asset is in service in the current


fiscal year and was added in a prior
period

Reinstate an asset

The asset was retired in the current


fiscal year

Reinstate a partially
retired asset

No transactions have occurred


since the partial retirement
Only the last partial retirement can
be reinstated

Copyright 2007, Oracle. All rights reserved.

Fully Retiring Assets

SOLD!

Asset # 78660
Total Cost $760,000,000

Copyright 2007, Oracle. All rights reserved.

Partially Retiring Assets


Asset # 100456

Asset # 88658

2 Units
Total Cost $10,000

1 Unit

Cost $5,000

Total Cost $100,000,000

RETIRE

Cost $1,000,000

Copyright 2007, Oracle. All rights reserved.

Mass Asset Retirements


Define Mass Retirement
Status = NEW
Reinstate Mass
Retirement
Click Retire Button
Status = PENDING

Run Calc Gains & Losses


Status = PROCESSED

Assets Retired

Copyright 2007, Oracle. All rights reserved.

Reinstate Mass
Retirement

Assets
Reinstated

External Retirements
Input

FA_MASS_EXT_RETIREMENTS

Retirements &
Reinstatements API

Retirement
Copyright 2007, Oracle. All rights reserved.

Reinstating Retired Assets

Oracle Assets makes it easy to reinstate formerly


retired assets.

Retirement
Option to
Status
Choose

Result

Pending

Undo Retirement

Deletes the retirement


transaction

Processed
reinstatement

Reinstate

Creates the
transaction, and reverses
the retirement entry

Reinstatement

Undo
Reinstatement

Reverses the
reinstatement entry

Copyright 2007, Oracle. All rights reserved.

Error

Calculate Gains and Losses Program

Run the calculate gains and


losses program to:
Calculate gains and losses
resulting from retirements
Correct the accumulated
depreciation for reinstated assets
Calculate Investment Tax Credit
recapture for retired assets in a
tax book, if necessary

Copyright 2007, Oracle. All rights reserved.

Retirement Processing Flow

New Retirement
Status = PENDING
Undo Retirement

Reinstated
Status =
DELETED

Run Calculate
Gains and Losses

Retirement Status
= PROCESSED

Reinstate?

Reinstate Retirement
Status = REINSTATE

Undo Reinstatement
Status = PROCESSED
Asset Returns
to Original State

Asset Retired

Copyright 2007, Oracle. All rights reserved.

Processing a Pending Retirement


and Reinstatement
PENDING RETIREMENT

REINSTATEMENT

Calculate the gain or loss

Reinstate the asset cost


and depreciation reserve
to the appropriate
accounts
Determine depreciation
adjustment for missed
depreciation
Update status to
DELETED

Remove the asset cost


and accumulated
depreciation
Depreciate during the
period of retirement
according to the
retirement convention
Take any necessary ITC
recapture
Update status to
PROCESSED

Copyright 2007, Oracle. All rights reserved.

Calculating Depreciation for the Period Retired

Factors that affect the period


depreciation of an asset retired:
Effective date of the retirement
The Depreciate-in-Year-Retired
flag
The retirement convention
The Depreciate if Retired in First
Year flag in the Book Controls
window

Copyright 2007, Oracle. All rights reserved.

Recording Retirements and Reinstatements


Asset Type
Action

Capitalized CIP*

1. Charges or reverses
depreciation for the year retired
2. Removes the asset cost and
accumulated depreciation from
the corresponding accounts
3. Clears the proceeds of sale and
the cost of removal
4. Recognizes gain or loss from
the retirement
5. Creates no journal entries
* Construction-in-Process

Copyright 2007, Oracle. All rights reserved.

Expensed

Recording Retirements

Calculating the Gain or Loss from an Asset Sale

Sale
proceeds

Removal
cost

Retired
net
book value

Gain/Loss

Copyright 2007, Oracle. All rights reserved.

Retired
revaluation
reserve

Recording a Retirement on
Multiple Accounts
Oracle Assets creates journal entries for each
component of the gain or loss amount.
Sale proceeds
Removal cost
Retired net book value
Retired revaluation reserve

Copyright 2007, Oracle. All rights reserved.

Retirement Journal Entries Example


Asset Cost $4,000
Depreciating using STL 4 year life
Sell the asset in Period 31 for $2,000
Removal cost is $500
The asset uses a retirement
convention and depreciation method
that allows you to take depreciation
in the period of retirement.
A single gain and loss
account is used
Copyright 2007, Oracle. All rights reserved.

Recording Prior Period Reinstatement Entries

Scenario:
In Year 2 Qtr 1, you retired a $4,000 asset.
The asset had a four-year life and used the straightline depreciation method.
In Year 2 Qtr 3, you reinstate the asset.
Entry to Reinstate the Asset and Calculate Depreciation
Asset Cost
4,000
Depreciation Expense
250
Depreciation Expense (adjustment)
250
Accumulated Depreciation
1,750
Gain or Loss
2,750

Copyright 2007, Oracle. All rights reserved.

Retirement Reports

Report Name

Description

Form 4684: Casualties


and Thefts Report

Shows the asset retirements with


the retirement type that you request

Retired Assets Without


Property Class Report

Shows the retired assets without


a 1245 or 1250 property class

Retired Assets Without


Retirement Types
Report

Shows retired assets without


assigned types

Asset Retirements by
Cost Center

Shows the asset retirements for


each cost center for the book and
period that you select with an
asterisk (*) next to reinstated assets

Copyright 2007, Oracle. All rights reserved.

Retirement Reports

Report Name

Description

Asset Retirements
Report

Shows the assets that you retired


for the Book and accounting period
range that you select

Asset Disposals Shows the assets that you removed


Responsibility Report
from the cost centers through
retirements and transfers, and the
location of each unit
Reinstated Assets
Report

Shows reinstatement for the Book


and From/To period range

Tax Retirement Report

Shows gain or loss and any ITC


recapture for asset retirements

Copyright 2007, Oracle. All rights reserved.

Retirement Reports

Report Name

Description

Mass Retirements

Reviews the mass retirement effect


before you process it

Mass Retirements
Exception Report

Identifies exception assets not


retired as part of the mass
retirement program

Retirements Report

Reviews the assets retired for the


book and accounting period range
selected

Copyright 2007, Oracle. All rights reserved.

Summary

After completing this module, you should now be able


to:
Discuss how asset retirements fits within the
Oracle Assets process
Explain the necessity of tracking asset retirements
and proper recording of accounting transactions
Discuss the Calculate Gains and Losses program
and its role in asset retirements
Discuss the ability to reinstate asset retirements

Copyright 2007, Oracle. All rights reserved.