Friday, September 9, 2016

Oracle Fixed Assets

v  Fixed Assets is a standalone application.
v  This will come at SOB/PL level.
v  Key Flex Fields in Fixed Assets:
1.      Category KFF
2.      Asset Location KFF
3.      Asset Key KFF

v  We can create only one structure by using the above KFF
v  Based on the asset life we have to create Fiscal Calendar. For example 1976 to 2030.
v  Depreciation calendar is used to calculate depreciation.
v  Prorate convention calendar is used to prorate the depreciation from which date to which date we have to consider.

v  Mass additions: Process of transferring fixed assets related data from Accounts Payables to Fixed Assets is called Mass additions. After transferring data from AP, data will store in FA Mass Addition interface tables.

AP --à FA Mass additions interface tables ----à FA

The data which is there in “FA Mass additions interface tables” we can see from FA application.
If you want to convert the invoices information to Assets, we can add necessary data at interface tables, then the data will store in FA base tables.

v  For Quick addition of Assets, only basic information is required.
v  For detailed additions: list of information is required like: Asset category, Asset name, cost of asset and depreciation of Asset.

Difference between:  Detailed addition and Quick addition:
      As mentioned above for detailed additions we have to navigate several windows to enter an asset.
(Additions, Book and Assignments)
      Whereas through quick addition button asset information will be maintained by navigating single window only. Latter detailed information would be updated.

v  Depreciation calculation is in 3 methods:
1.      Straight line method
2.      Diminishing method
3.      Production based

ü  Straight line method: We will set a fixed amount for a fixed period as depreciation. For example: Asset cost 1 Lac, asset life 5 years, so depreciation per year 1 Lac / 5 = 20000

ü  Diminishing method: depreciation will be calculated on written down value of asset.
For example:
Year 1        Asset value                   500000
           Depreciation 10% 50000
           Balance                  450000

Year 2        Depreciation 10% 45000
           Balance                  405000

Year 3        Depreciation 10% 40500
           Balance                  355000

ü  Production base: Depreciation will be calculated on the production units

v  Asset transfer can be done between Locations, Employees, and Accounts.
v  Asset Changes: through this changes we can change the:
-      Depreciation
-      Prorate Convention
-      Cost Adjustment
-      Life time of Assets

v  Asset reclassification is used to reclassify the assets from one category to another category.

v  Projection: Through the projections we can have an idea of the future depreciation. We can see the depreciation of a asset for the future period also.

v  What if analysis: with if analysis we can analyze the differences between two different depreciation methods.

v  Over ride depreciation:  Example: A plant is running in 2 shifts in a month producing 2000 units. If one month they used the plant per day 3 shifts then the production is 3000 units. As per the regular calculation system will consider depreciation only for 2000 units.

But if you want to consider depreciation for 3000 units we have to over ride the depreciation. Over ride the depreciation where there is unplanned activity takes place. System will consider first over ride depreciation and then original depreciation.

v  Retirement: For every asset there will be a useful life of period. Once this period completed every asset should me retired. Some other reasons for retirement: Sale of Asset, Theft, Life of asset and Damage of asset.

v  Roll back depreciation: If we run the depreciation without period close, then we cannot make any modifications. Then if we want to do any modifications we have to do “Roll back depreciation”.

v  Calendars: FA – depreciation calendar & GL – Accounting Calendar. While transferring the information from FA to GL, the period name should be same in the both calendars; otherwise data cannot be transferred.  

v  Types of Books:
      For Assets, Journals will be created based on the asset book.
      This Asset book will be associated with the particular Ledger.
      Asset book will determine the:
        -       Calendar
        -       Accounting Rules
        -       Natural Accounts
        -       Ledger for various Fixed Assets.

Pre requisites to create Asset Book:
-          Specify System Controls
-          Define Calendars
-          Set up your Account segment values and combinations
-          Set up your journal entry formats.       

In Fixed Assets we have 3 types of books:
1.      Corporate Book
2.      Tax Book
3.      Budget Book

Corporate Book:
ü  This is also called Depreciation book, Asset book and Asset Register.
ü  Corporate book is used to maintain the Asset information and to maintain Depreciation information.
ü  Depreciation information will be maintained by following The Companies Act.

Tax Book:
ü  We will maintain the depreciation information by following the Income tax Act.
ü  We will copy the Asset information from the corporate book to Tax book.
ü  We maintain companies Act and IT Act for depreciation, if the % of depreciation is different for companies act and IT act.

Budget book:
ü  We will maintain capital Budget information.
ü  The Asset information also required in the tax book.
ü  It is an automatic activity
ü  We will copy the asset information from the corporate book to the tax book.
ü  We have 2 options to copy the information:
1.      Initial mass copy
2.      Periodic mass copy

v  Type of Assets:
Assets are again 3 types as per Fixed Assets
1.      Capitalized
2.      CIP
3.      Group Assets

Capitalized: Which Asset is started for using and Assets placed for service.

CIP: Construction in process: An asset which is under construction, for example building under construction. CIP asset will changed to capitalized when it starts service.

Group Assets: Grouping the assets related to same group.

v  Accumulated Depreciation: Total depreciation from beginning of the asset to till date.
v  YTD depreciation: For particular year
v  Depreciation: For particular period.

v  Physical Inventory: Process of verification assets information in the Oracle system with the Physical assets.

v  Split: Split is dividing the Assets into individual units of assets.

We purchased 5 plants at a time for Rs 5 Lakhs.  We received only one invoice for all the plants. We enter this invoice through Accounts payables. Now we are sending this information to FA through Mass Additions. Now we want that 5 plants information differently. So we will split that into 5 plants.

v  Merge: Merge is a process of adding multiple assets to a single Asset.
We have one asset like Computer.
Now we are purchasing first monitor and then CPU.
Now we are having 2 invoices I AP.
Now this will be transfer to FA through Mass addition.
These two invoices should be merged because they are single Asset.

Depreciation Calendar (Asset Calendar)
      You can set up as many calendars as you need.
      Each book you set up requires a depreciation calendar and a prorate calendar.
      The depreciation calendar determines the number of accounting periods in a fiscal year.
      The prorate calendar determines the number of prorate periods in your fiscal year.
      You can use one calendar for multiple depreciation books and as both the depreciation and prorate calendar for a book.
      Period name as per Accounting Calendar in GL should be same as in the FA otherwise we cannot transfer information from FA to GL.

Specifying the dates for Calendar periods
      Your corporate books can share the same calendar.
      A tax book can have a different calendar than its associated corporate book.
      The depreciation program uses the prorate calendar to determine the prorate period which is used to choose the depreciation rate.
      You must initially set up all calendar periods from the period corresponding to the oldest date placed in service to the current period.
      You must set up at least one period before the current period. At the end of each fiscal year, Oracle Assets automatically sets up the periods for the next fiscal year.

        Setup à Asset system à Prorate Conventions

      Prorate convention Calendar is used to determine the depreciation starting date for asset in first year.
      Divide the year in to 2 parts and enter from date to dates and enter each period beginning date as prorated date. (Below 180 days & Above 180 days).
      If you enable “Depreciate when place in service” system will not consider the dates mentioned in Prorated Calendar.

Define Asset Book – Corporate
Nav : Setup --> Asset System --> Book Controls

This window has 3 Tabs:
        1.   Calendar
        2.   Accounting Rules
        3.   Natural Accounts

ü  Enter the name of the book you want to define.
ü  Choose Class as “Corporate”
Complete 3 Tabs

Nav : Setup --> Asset System --> Asset Categories
      Asset Category is used to group the Assets based on the Depreciation method and Rate, and also building a relationship with the Asset book.
      Category information is common for a group of assets.
      Oracle Assets defaults these depreciation rules when you add an asset, to help you add assets quickly.
      The default depreciation rules that you set up for a category also depend upon the date placed in service ranges you specify.

Pre requisites to set up Asset categories:
ü  Set up Category Flex Field
ü  Set up depreciation Book
ü  Setup Depreciation Calendar & Prorate Convention Calendar
ü  Setup Depreciation Methods

   Category Types:  3
        1. Lease
        2. Non Lease
        3. Lease holds Improvements

  Owner ship is 2 types:  i) Owned   ii) Leased

Property Types:  6
  1. Personal
  2. Residential
  3. Real
  4. Intangible
  5. Property
  6. Other

Step: 1
Define Asset Category
Navigation:   Setup à Asset System à Asset Categories

Step: 2    Choose appropriate General ledger Accounts

Step: 3    Setup default rules
ü   Choose Depreciation Method & Rate
ü  Choose Prorate Convention Calendar & Retirement Convention Calendar

1.      Asset Additions by cost center report
2.      Asset transfers report
3.      Asset retirement report
4.      Asset retirement by cost center report
5.      Property Tax report
6.      Transaction history report
7.      Mass additions posting report
8.      Delete mass additions posting report
9.      Delete mass additions preview report
10.  Asset reclassification report
11.  Asset by category report
12.  Mass additions validity report
13.  Cost adjustment report
14.  CIP Asset report
15.  CIP capitalization report
16.  Unplanned depreciation

Fixed Asset period closing procedures
1.              Create all transactions (mass additions, retirements etc) before
running the Depreciation Program. Check for the Mass Additions with the Status of “NEW”.
2.              Before running the depreciation, Project the depreciation by
running the Projections. Select the projection calendar, number of periods, Starting period, the corporate book and click on the ‘Run’ button. Total Depreciation for the period will be shown as the output in the concurrent request output.
3.    Run the depreciation program without closing the period.
4.    Module: Fixed Assets.
5.    Navigation: Depreciation à Depreciation. Select the corporate
book and the period. Do Not Check the Check Box‘ Close Period ’
6.    Verify The Journal Entry Reserve Report for the calculation of
Depreciation and whether depreciation is calculated for all the assets. After checking the results go to next step.
7.    Now run the Depreciation program with the check box ‘Close
Period’ Checked.
8.    Transfer information from fixed assets to General Ledger.
(Module: Fixed Assets. Navigation: Submit Reques àCreate Journal Entries in Fixed Asset. Choose the Corporate Book and period for parameters as shown below.

9.    This process creates the Journal Entries Automatically in the
General Ledger. Journal import from general Ledger need not be run both for Primary as well as Reporting Set of Books.
10.    Verify the Unposted Entries in the journal Entry Screen.
11.                       Post the journal Entries.

2.1  Opening / Closing the Period in Fixed Assets:

1.    If the Depreciation is run with the Check Box ‘Close Period’ Checked, the period will be closed and the next period will be opened automatically.
         Note: In Fixed Assets, once a period is closed, it cannot be reopened.

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