1. What are the different ways of adding assets in FA?
Ans) You can use one of the following processes to enter new assets:
Use the QuickAdditions process to quickly enter ordinary assets when you must enter them manually. You can enter minimal information in the QuickAdditions window, and the remaining asset information defaults from the asset category, book, and the date placed in service.
Use the Detail Additions process to manually add complex assets which the QuickAdditions process does not handle:
- Assets that have a salvage value
- Assets with more than one assignment
- Assets with more than one source line
- Assets to which the category default depreciation rules do not apply
- Subcomponent assets
- Leased assets and leasehold improvements
Use the Mass Additions process to add assets automatically from an external source. Create assets from one or more invoice distribution lines in Oracle Payables, CIP asset lines in Oracle Projects, asset information from another assets system, or information from any other feeder system using the interface. You must prepare the mass additions to become assets before you post them to Oracle Assets.
2. How do we depreciate Assets in Oracle Applications?
Ans) Run the depreciation program independently for each of your depreciation books. The depreciation program calculates depreciation expense and adjustments, and updates the accumulated depreciation and year-to-date depreciation.
To run depreciation:
1. Open the Run Depreciation window.
2. Choose the Book for which you want to run depreciation.
3. Choose Run to submit concurrent requests to run the calculate gains and losses, depreciation, and reporting programs.
Attention: You cannot enter transactions for the book while depreciation is running.
Oracle Assets automatically runs the Journal Entry Reserve Ledger report when you run the depreciation program for a corporate book, and the Tax Reserve Ledger report for a tax book, so you can review the depreciation calculated.
4. Review the log files and report after the request completes.
3. What is the significance of asset books in FA? Types?
Ans) You can define corporate, tax, and budget depreciation books. You must set up your depreciation books before you can add assets to them. You can set up multiple corporate books that create journal entries for different ledger, or to the same ledger. In either case, you must both run depreciation and create journal entries for each depreciation book. For each corporate book, you can set up multiple tax and budget books that are associated with it.
Prerequisites
· Specify system controls. See: Specifying System Controls.
· Define your calendars. See: Specifying Dates for Calendar Periods.
· Set up your Account segment values and combinations. See: Defining Accounts.
· Set up your journal entry formats. See: Defining Journal Sources and Defining Journal Categories.
To define a depreciation book: 1. Open the Book Controls window.
2. Enter the name of the book you want to define.
The book name cannot contain any special characters.
Suggestion: The name you enter appears in List of Values windows which allow no more than 15 spaces. You may want to limit the book name to 15 characters.
3. Enter a brief, unique description of the book.
4. Choose a Corporate, Tax, or Budget book class.
5. Enter calendar information for your book.
6. Enter accounting rules for your book.
7. Enter natural accounts for your book.
8. Enter tax rules for your book.
9. Save your work.
4. What is meant by retire asset? How do we retire assets in Oracle applications?
Ans) Retire an asset when it is no longer in service. For example, retire an asset that was stolen, lost, or damaged, or that you sold or returned.
Full and Partial Retirements by Units or Cost
You can retire an entire asset or you can partially retire an asset.
· When you retire an asset by units, Oracle Assets automatically calculates the fraction of the cost retired
· When you retire an asset by cost, the units remain unchanged and the cost retired is spread evenly among all assignment lines
Restrictions
You cannot retire assets by units in your tax books; you can only perform partial and full cost retirements in a tax book. Also, you can only perform full retirements on CIP assets; you cannot retire them by units, or retire them partially by cost.
If you perform multiple partial retirements on an asset within a period, you must run the calculate gains and losses program between transactions.
Gain/Loss = Proceeds of Sale - Cost of Removal - Net Book Value Retired + Revaluation Reserve Retired If you partially retire a units of production asset, you must manually adjust the capacity to reflect the portion retired.
Full Retirement for a Group of Assets (Mass Retirement)
Use the Mass Retirements window to retire a group of assets at one time. You specify selection criteria, including asset category, asset key, location, depreciation expense account segments, employee, asset number range, and date placed in service range, to select the assets you want to retire. You can also elect to automatically retire subcomponents along with the parent asset.
When you define a mass retirement, you can choose to immediately submit the concurrent request to retire the selected assets, or you can save the mass retirement definition for future submission. You can change the details of any mass retirement before you submit the concurrent request.
When you submit a mass retirement, Oracle Assets automatically runs the Mass Retirements Report and the Mass Retirements Exception Report. You can review these reports, perform a mass reinstatement, or adjust an individual retirement transaction if necessary.
If you wish to simultaneously run this program in more than one process to reduce processing time, Oracle Assets can be set up to run this program in parallel. For more information on setting up parallel processing and the FA: Number of Parallel Requests profile option.
Exceptions
Oracle Assets does not retire the following types of assets, even if they are selected as part of a mass retirements transaction:
· Assets with transactions dated after the retirement date you enter
· Assets that are multiply distributed and one or more values do not meet the mass retirement selection criteria
· For reinstatements, assets retired during a prior fiscal year
Independence Across Depreciation Books
You can retire an asset or a group of assets from any depreciation book without affecting other books. To retire an asset from all books, retire it from each book separately, or set up Mass Copy to copy retirements to the other books in the Book Controls window.
Retirement and Reinstatement Statuses
Each retirement transaction has a status. A new retirement receives the status PENDING. After you run depreciation or calculate gains and losses, the status changes to PROCESSED.
When you reinstate a PENDING retirement, Oracle Assets deletes the retirement transaction and the asset is immediately reinstated. If you reinstate a PROCESSED retirement, Oracle Assets changes the status to REINSTATE, and you must rerun the Calculate Gains and Losses program or run depreciation to process the reinstatement.
When you perform a mass retirement, Oracle Assets creates PENDING retirement transactions. If you submit a mass reinstatement before running the Calculate Gains and Losses program, Oracle Assets immediately reinstates these assets. If you submit a mass reinstatement to reinstate PROCESSED retirements, you must rerun the Calculate Gains and Losses program or run depreciation to process the reinstatements.
ITC Recapture
If you retire an asset for which you took an investment tax credit (ITC) and the ITC recapture applies, Oracle Assets automatically calculates it.
Correct Retirement Errors
You can undo asset retirement transactions, and Oracle Assets creates all the necessary journal entries for your general ledger to catch up any missed depreciation expense. You can reinstate an individual or mass retirement transaction. For multiple partial retirements, You can reinstate only most recent or processed retirement. You cannot reinstate an asset retired in a previous fiscal year. You can only reinstate assets retired in the current fiscal year.
Retirement Conventions
Oracle Assets lets you use a different prorate convention when you retire an asset than when you added it. The retirement convention in the Retirements window and the Mass Retirements window defaults from the retirement convention you set up in the Asset Categories window. You can change the retirement convention for an individual asset in the Retirements window before running the Calculate Gains and Losses program.
Per Diem Retirements
If you set up a book to divide depreciation by days and to use both a daily prorate convention and a daily prorate calendar, and if you retire an asset in that book in the current period, Oracle Assets takes depreciation expense for the number of days up to, but not including, the date of retirement. If you perform a prior period retirement, Oracle Assets backs out the depreciation expense through the date of retirement. If you reinstate the asset, Oracle Assets catches up depreciation expense through the end of the current period.
Retirement Transactions
For prior-period retirement dates:
You can retire retroactively only in the current fiscal year, and only after the most recent transaction date.
Proceeds of Sale and Cost of Removal
You can enter proceeds of sale and cost of removal amounts when you perform a retirement or mass retirement. For a mass retirement, you enter the
total proceeds of sale and/or the
totalcost of removal amounts, and Oracle Assets prorates the total amounts over the assets being retired according to each asset's current cost.
Oracle Assets uses the following formula to prorate the
proceeds of sale amount across the assets you select:
Proceeds of Sale (per asset) = Current cost of asset/Total current cost of all selected assets X Proceeds of Sale Oracle Assets uses the following formula to prorate the
cost of removal amount across the assets you select:
Cost of removal (per asset) = Current cost of asset/Total current cost of all selected assets X Cost of Removal 5. What are the various Journal Entries generated through fixed assets? Ans)
Addition Journal
Current and Prior Period Addition
You purchase and place the asset into service in Year 1, Quarter 1.
Payables System
| Account Description | Debit | Credit |
| Asset Clearing | 4,000.00 | |
| Accounts Payable Liability | | 4,000.00 |
Oracle Assets - CURRENT PERIOD ADDITION
| Account Description | Debit | Credit |
| Asset Cost | 4,000.00 | |
| Depreciation Expense | 250.00 | |
| Asset Clearing | | 4,000.00 |
| Accumulated Depreciaiton | | 250.00 |
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.
Oracle Assets - PRIOR PERIOD ADDITION
| Account Description | Debit | Credit |
| Asset Cost | 4,000.00 | |
| Depreciation Expense | 250.00 | |
| Depreciation Expense (Adjustment) | 1,250.00 | |
| Asset Clearing | | 4,000.00 |
| Accumulated Depreciaiton | | 1,500.00 |
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.
As an audit trail after the merge, the original cost of the invoice line remains on each line. When you create an asset from the merged line, the asset cost is the total merged cost.
Oracle Assets creates journal entries for the asset cost account for the mass addition into which the others were merged. Oracle Assets creates journal entries for each asset clearing account. For example, you merge mass addition #1 into mass addition #2, so Oracle Assets creates the following journal entries:
| Account Description | Debit | Credit |
| Asset Cost (mass addition #2 asset cost account) | 4,000.00 | |
| Depreciation Expense | 1,500.00 | |
| Asset Clearing (mass addition #1 accounts payable clearing account) | | 3,000.00 |
| Asset Clearing (mass addition #2 accounts payable clearing account) | | 1,000.00 |
| Accumulated Depreciaiton | | 1,500.00 |
Construction-In-Process (CIP) Addition
You add a CIP asset. (CIP assets do not depreciate)
Oracle Assets
| Account Description | Debit | Credit |
| CIP Cost | 4,000.00 | |
| CIP Clearing | | 4,000.00 |
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.
Capitalization
When you capitalize CIP assets, 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.
| Account Description | Debit | Credit |
| Asset Cost | 4,000.00 | |
| Depreciation Expense | 250.00 | |
| CIP Cost | | 4,000.00 |
| Accumulated Depreciation | | 250.00 |
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.
Oracle Assets - CHANGE TYPE FROM CAPITALIZED TO CIP (CURRENT PERIOD)
| Account Description | Debit | Credit |
| CIP Cost | 4,000.00 | |
| Asset Clearing | | 4,000.00 |
Retirement Journals
Current Period Retirements
Example: You place an asset in service in Year 1, Quarter 1. The asset cost is $4,000, the life is 4 years, and you are using straight-line depreciation. In Year 3, Quarter 3, you sell the asset for $2,000. The cost to remove the asset is $500. The asset uses a retirement convention and depreciation method which take depreciation in the period of retirement. You retire revaluation reserve in this book.
| Account Description | Debit | Credit |
| Accounts Receivable | 2,000.00 | |
| Proceeds of Sales Clearing | | 2,000.00 |
| Account Description | Debit | Credit |
| Cost of Removal Clearing | 500.00 | |
| Accounts Payable | | 500.00 |
| Account Description | Debit | Credit |
| Accumulated Depreciation | 2,500.00 | |
| Proceeds of Sale Clearing | 2,000.00 | |
| Cost of Removal Gain | 500.00 | |
| Revaluation Reserve | 600.00 | |
| Net Book Value Retired Gain | 1,500.00 | |
| Asset Cost | | 4,000.00 |
| Proceeds of Sale Gain | | 2,000.00 |
| Cost of Removal Clearing | | 500.00 |
| Revaluation Reserve Retired Gain | | 600.00 |
If you enter the same account for each gain and loss account, Oracle Assets creates a single journal entry for the net gain or loss as shown in the following table:
Book Controls window:
| Accounts | Gain | Loss |
| Proceeds of Sale | 1000 | 1000 |
| Cost of Removal | 1000 | 1000 |
| Net Book Value Retired | 1000 | 1000 |
| Revaluation Reserve Retired | 1000 | 1000 |
| Account Description | Debit | Credit |
| Accumulated Depreciation | 2,500.00 | |
| Proceeds of Sale Clearing | 2,000.00 | |
| Revaluation Reserve | 600.00 | |
| Asset Cost | | 4,000.00 |
| Cost of Removal Clearing | | 500.00 |
| Gain/Loss | | 600.00 |
Prior Period Retirement
Example: You place an asset in service in Year 1, Quarter 1. The asset cost is $4,000, the life is 4 years, and you are using straight-line depreciation. In Year 3, Quarter 3, you discover that the asset was sold in Year 3, Quarter 1, for $2,000. The removal cost was $500. The asset uses a retirement convention and depreciation method which allow you to take depreciation in the period of retirement.
| Account Description | Debit | Credit |
| Accounts Receivable | 2,000.00 | |
| Proceeds of Sale Clearing | | 2,000.00 |
| Account Description | Debit | Credit |
| Cost of Removal Clearing | 500.00 | |
| Accounts Payable | | 500.00 |
| Account Description | Debit | Credit |
| Accumulated Depreciation | 2,500.00 | |
| Proceeds of Sale Clearing | 2,000.00 | |
| Cost of Removal Loss | 500.00 | |
| Net Book Value Retired Loss | 1,750.00 | |
| Proceeds of Sale Loss | | 2,000.00 |
| Cost of Removal Clearing | | 500.00 |
| Asset Cost | | 4,000.00 |
| Depreciation Expense | | 250.00 |
Current Period Reinstatement
Example: You discover that you retired the wrong asset. Oracle Assets creates journal entries for the reinstatement to debit asset cost, credit accumulated depreciation, and reverse the gain or loss you recognized for the retirement. Oracle Assets reverses the journal entries for proceeds of sale, cost of removal, net book value retired, and revaluation reserve retired. Oracle Assets also reverses the journal entries you made to clear the proceeds of sale and cost of removal.
Oracle Assets also creates journal entries to recover the depreciation not charged to the asset and for the current period depreciation expense.
| Account Description | Debit | Credit |
| Asset Cost | 4,000.00 | |
| Cost of Removal Clearing | 500.00 | |
| Gain / Loss | 600.00 | |
| Depreciation Expense | 250.00 | |
| Accumulated Depreciation | | 2,750.00 |
| Proceeds of Sale Clearing | | 2,000.00 |
| Revaluation Reserve | | 600.00 |
Prior Period Reinstatement
Example: You place an asset in service in Year 1, Quarter 1. The asset cost is $4,000, the life is 4 years, and you are using straight-line depreciation. In Year 2, Quarter 1, you retire the asset. In Year 2, Quarter 4, you realize that you retired the wrong asset so you reinstate it.
| Account Description | Debit | Credit |
| Asset Cost | 4,000.00 | |
| Cost of Removal Clearing | 500.00 | |
| Proceeds of Sale Loss | 2,000.00 | |
| Depreciation Expense | 250.00 | |
| Depreciation Expense (adjustment) | 500.00 | |
| Net Book Value Retired Loss | | 2,750.00 |
| Cost of Removal Loss | | 500.00 |
| Proceeds of Sale Clearing | | 2,000.00 |
| Accumulated Depreciation | | 2,000.00 |
Journal Entries for Depreciation: When you run depreciation, Oracle Assets creates journal entries for your accumulated depreciation accounts and your depreciation expense accounts. Oracle Assets creates journal entries for your bonus reserve accounts and your bonus depreciation accounts, if any. 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 $200 and a bonus charge of $50:
| Account Description | Debit | Credit |
| Depreciation Expense | 200.00 | |
| Bonus Expense | 50.00 | |
| Accumulated Depreciation | | 200.00 |
| Bonus Reserve | | 50.00 |
Journal Entries for Revaluation:
The following examples illustrate the effect on your assets and your accounts when you specify different revaluation rules.
Revalue Accumulated Depreciation
Example 1: You place an asset in service in Year 1, Quarter 1. The asset cost is $10,000, the life is 5 years, and you are using straight-line depreciation.
In Year 2, Quarter 1 you revalue the asset using a revaluation rate of 5%. Then in Year 4, Quarter 1 you revalue the asset again using a revaluation rate of -10%.
Revaluation Rules:
· Revalue Accumulated Depreciation = Yes
· Amortize Revaluation Reserve = No
· Retire Revaluation Reserve = No
Oracle Assets bases the new depreciation expense on the revalued remaining net book value.
In Year 5, Quarter 4, at the end of the asset's life, you retire the asset with no proceeds of sale or cost of removal.
The effects of the revaluations are illustrated in the following table:
| Period (Yr, Qtr.) | Asset Cost | Deprn. Expense | Accum. Deprn. | Reval. Reserve |
| Yr1,Q1 | 10,000.00 | 500.00 | 500.00 | 0.00 |
| Yr1,Q2 | 10,000.00 | 500.00 | 1,000.00 | 0.00 |
| Yr1,Q3 | 10,000.00 | 500.00 | 1,500.00 | 0.00 |
| Yr1,Q4 | 10,000.00 | 500.00 | 2,000.00 | 0.00 |
| Reval. 1 5% | 10,500.00 | 0.00 | *2,100.00 | **400.00 |
| Yr2,Q1 | 10,500.00 | 525.00 | 2,625.00 | 400.00 |
| Yr2,Q2 | 10,500.00 | 525.00 | 3,150.00 | 400.00 |
| Yr2,Q3 | 10,500.00 | 525.00 | 3,675.00 | 400.00 |
| Yr2,Q4 | 10,500.00 | 525.00 | 4,200.00 | 400.00 |
| Yr3,Q1 | 10,500.00 | 525.00 | 4,725.00 | 400.00 |
| Yr3,Q2 | 10,500.00 | 525.00 | 5,250.00 | 400.00 |
| Yr3,Q3 | 10,500.00 | 525.00 | 5,775.00 | 400.00 |
| Yr3,Q4 | 10,500.00 | 525.00 | 6,300.00 | 400.00 |
| Reval. 2 -10% | 9,450.00 | 0.00 | *5,670.00 | **-20.00 |
| Yr4,Q1 | 9,450.00 | 472.50 | 6,142.50 | -20.00 |
| Yr4,Q2 | 9,450.00 | 472.50 | 6,615.00 | -20.00 |
| Yr4,Q3 | 9,450.00 | 472.50 | 7,087.50 | -20.00 |
| Yr4,Q4 | 9,450.00 | 472.50 | 7,560.00 | -20.00 |
| Yr5,Q1 | 9,450.00 | 472.50 | 8,032.50 | -20.00 |
| Yr5,Q2 | 9,450.00 | 472.50 | 8,505.00 | -20.00 |
| Yr5,Q3 | 9,450.00 | 472.50 | 8,977.50 | -20.00 |
| Yr5,Q4 | 9,450.00 | 472.50 | 9,450.00 | -20.00 |
| Retire | 0.00 | 0.00 | 0.00 | -20.00 |
REVALUATION 1 Year 2, Quarter 1, 5% revaluation
| *Accumulated Depreciation = Existing Accumulated Depreciation + [Existing Accumulated Depreciation x (Revaluation Rate / 100)] |
| 2,000 + [2,000 X (5/100)] = 2,100 |
| **Revaluation Reserve = Existing Revaluation Reserve + Change in Net Book Value |
| 0 + (8,400 - 8,000) = 400 |
| Account Description | Debit | Credit |
| Asset Cost | 500.00 | |
| Revaluation Reserve | | 400.00 |
| Accumulated Depreciation | | 100.00 |
REVALUATION 2 -10% revaluation in Year 4, Quarter 1:
| Account Description | Debit | Credit |
| Revaluation Reserve | 420.00 | |
| Accumulated Depreciation | 630.00 | |
| Asset Cost | | 1,050.00 |
Retirement in Year 5, Quarter 4:
| Account Description | Debit | Credit |
| Accumulated Depreciation | 9,450.00 | |
| Asset Cost | | 9,450.00 |
Accumulated Depreciation Not Revalued
Example 2: You place an asset in service in Year 1, Quarter 1. The asset cost is $10,000, the life is 5 years, and you are using straight-line depreciation.
In Year 2, Quarter 1 you revalue the asset using a revaluation rate of 5%. Then in Year 4, Quarter 1 you revalue the asset again using a revaluation rate of -10%.
Revaluation Rules:
· Revalue Accumulated Depreciation = No
· Amortize Revaluation Reserve = No
· Retire Revaluation Reserve = Yes
For the first revaluation, the asset's new revalued cost is $10,500. Since you do not revalue the accumulated depreciation, Oracle Assets transfers the balance to the revaluation reserve in addition to the change in cost.
Since you are also not amortizing the revaluation reserve, this amount remains in the revaluation reserve account until you retire the asset, when Oracle Assets transfers it to the appropriate revaluation reserve retired account. Oracle Assets bases the new depreciation expense on the revalued net book value.
For the second revaluation, the asset's revalued cost is $9,450. Again, since you do not revalue the accumulated depreciation, Oracle Assets transfers the balance to the revaluation reserve along with the change in cost.
You retire the asset in Year 5, Quarter 4, with no proceeds of sale or cost of removal.
The effects of the revaluations are illustrated in the following table:
| Period (Yr, Qtr.) | Asset Cost | Deprn. Expense | Accum. Deprn. | Reval. Reserve |
| Yr1,Q1 | 10,000.00 | 500.00 | 500.00 | 0.00 |
| Yr1,Q2 | 10,000.00 | 500.00 | 1,000.00 | 0.00 |
| Yr1,Q3 | 10,000.00 | 500.00 | 1,500.00 | 0.00 |
| Yr1,Q4 | 10,000.00 | 500.00 | 2,000.00 | 0.00 |
| Reval. 1 5% | 10,500.00 | 0.00 | 0.00 | *2,500.00 |
| Yr2,Q1 | 10,500.00 | **656.25 | 6,56.25 | 2,500.00 |
| Yr2,Q2 | 10,500.00 | 656.25 | 1,312.50 | 2,500.00 |
| Yr2,Q3 | 10,500.00 | 656.25 | 1,968.75 | 2,500.00 |
| Yr2,Q4 | 10,500.00 | 656.25 | 2,625.00 | 2,500.00 |
| Yr3,Q1 | 10,500.00 | 656.25 | 3,281.25 | 2,500.00 |
| Yr3,Q2 | 10,500.00 | 656.25 | 3,937.50 | 2,500.00 |
| Yr3,Q3 | 10,500.00 | 656.25 | 4,593.75 | 2,500.00 |
| Yr3,Q4 | 10,500.00 | 656.25 | 5,250.00 | 2,500.00 |
| Reval. 2 -10% | 9,450.00 | 0.00 | 0.00 | *6,700.00 |
| Yr4,Q1 | 9,450.00 | **1,181.25 | 1,181.25 | 6,700.00 |
| Yr4,Q2 | 9,450.00 | 1,181.25 | 2,362.50 | 6,700.00 |
| Yr4,Q3 | 9,450.00 | 1,181.25 | 3,543.75 | 6,700.00 |
| Yr4,Q4 | 9,450.00 | 1,181.25 | 4,725.00 | 6,700.00 |
| Yr5,Q1 | 9,450.00 | 1,181.25 | 5,906.25 | 6,700.00 |
| Yr5,Q2 | 9,450.00 | 1,181.25 | 7,087.50 | 6,700.00 |
| Yr5,Q3 | 9,450.00 | 1,181.25 | 8,268.75 | 6,700.00 |
| Yr5,Q4 | 9,450.00 | 1,181.25 | 9,450.00 | 6,700.00 |
REVALUATION 1 5% revaluation in Year 2, Quarter 1:
| Account Description | Debit | Credit |
| Asset Cost | 500.00 | |
| Accumulated Depreciation | 2,000.00 | |
| Revaluation Reserve | | 2,500.00 |
REVALUATION 2 -10% revaluation in Year 4, Quarter 1:
| Account Description | Debit | Credit |
| Accumulated Depreciation | 5,250.00 | |
| Asset Cost | | 1,050.00 |
| Revaluation Reserve | | 4,200.00 |
Retirement in Year 5, Quarter 4:
| Account Description | Debit | Credit |
| Accumulated Depreciation | 9,450.00 | |
| Revaluation Reserve | 6,700.00 | |
| Revaluation Reserve Retired Gain | | 6,700.00 |
| Asset Cost | | 9,450.00 |
Amortizing Revaluation Reserve
Example 3: You place an asset in service in Year 1, Quarter 1. The asset cost is $10,000, the life is 5 years, and you are using straight-line depreciation.
In Year 2, Quarter 1 you revalue the asset using a rate of 5%. Then in Year 4, Quarter 1 you revalue the asset again using a rate of -10%.
Revaluation Rules:
· Revalue Accumulated Depreciation = No
· Amortize Revaluation Reserve = Yes
For the first revaluation, the asset's new revalued cost is $10,500. Since you do not revalue the accumulated depreciation, Oracle Assets transfers the entire amount to the revaluation reserve. Since you are amortizing the revaluation reserve, Oracle Assets calculates the revaluation amortization amount for each period using the asset's depreciation method. Oracle Assets also bases the new depreciation expense on the revalued net book value.
For the second revaluation, the asset's revalued cost is $9,450. Again, since you do not revalue the accumulated depreciation, Oracle Assets transfers the entire amount to the revaluation reserve.
The effects of the revaluations are illustrated in the following table:
| Period (Yr,Qtr.) | Asset Cost | Deprn. Expense | Accum. Deprn. | Reval. Amortize | Reval. Reserve |
| Yr1,Q1 | 10,000.00 | 500.00 | 500.00 | 0.00 | 0.00 |
| Yr1,Q2 | 10,000.00 | 500.00 | 1,000.00 | 0.00 | 0.00 |
| Yr1,Q3 | 10,000.00 | 500.00 | 1,500.00 | 0.00 | 0.00 |
| Yr1,Q4 | 10,000.00 | 500.00 | 2,000.00 | 0.00 | 0.00 |
| Reval. 1 5% | 10,500.00 | 0.00 | 0.00 | 0.00 | *2,500.00 |
| Yr2,Q1 | 10,500.00 | **656.25 | 656.25 | ***156.25 | 2,343.75 |
| Yr2,Q2 | 10,500.00 | 656.25 | 1,312.50 | 156.25 | 2,187.50 |
| Yr2,Q3 | 10,500.00 | 656.25 | 1,968.75 | 156.25 | 2,031.25 |
| Yr2,Q4 | 10,500.00 | 656.25 | 2,625.00 | 156.25 | 1,875.00 |
| Yr3,Q1 | 10,500.00 | 656.25 | 3,281.25 | 156.25 | 1,718.75 |
| Yr3,Q2 | 10,500.00 | 656.25 | 3,937.50 | 156.25 | 1,562.50 |
| Yr3,Q3 | 10,500.00 | 656.25 | 4,593.75 | 156.25 | 1,406.25 |
| Yr3,Q4 | 10,500.00 | 656.25 | 5,250.00 | 156.25 | 1,250.00 |
| Reval. 2 -10% | 9,450.00 | 0.00 | 0.00 | 0.00 | *5,450.00 |
| Yr4,Q1 | 9,450.00 | **1,181.25 | 1,181.25 | ***681.25 | 4,768.75 |
| Yr4,Q2 | 9,450.00 | 1,181.25 | 2,362.50 | 681.25 | 4,087.50 |
| Yr4,Q3 | 9,450.00 | 1,181.25 | 3,543.75 | 681.25 | 3,406.25 |
| Yr4,Q4 | 9,450.00 | 1,181.25 | 4,725.00 | 681.25 | 2,725.00 |
| Yr5,Q1 | 9,450.00 | 1,181.25 | 5,906.25 | 681.25 | 2,043.75 |
| Yr5,Q2 | 9,450.00 | 1,181.25 | 7,087.50 | 681.25 | 1,362.50 |
| Yr5,Q3 | 9,450.00 | 1,181.25 | 8,268.75 | 681.25 | 681.25 |
| Yr5,Q4 | 9,450.00 | 1,181.25 | 9,450.00 | 681.25 | 0.00 |
REVALUATION 1 Year 2, quarter 1, 5% revaluation
| Account Description | Debit | Credit |
| Asset Cost | 500.00 | |
| Accumulated Depreciation | 2,000.00 | |
| Revaluation Reserve | | 2,500.00 |
Oracle Assets creates the following journal entries each period to amortize the revaluation reserve:
| Account Description | Debit | Credit |
| Revaluation Reserve | 158.25 | |
| Revaluation Amortization | | 158.25 |
REVALUATION 2 Year 4, quarter 1, -10% revaluation
| Account Description | Debit | Credit |
| Accumulated Depreciation | 5,250.00 | |
| Asset Cost | | 1,050.00 |
| Revaluation Reserve | | 4,200.00 |
Oracle Assets creates the following journal entries each period to amortize the revaluation reserve:
| Account Description | Debit | Credit |
| Revaluation Reserve | 681.25 | |
| Revaluation Amortization | | 681.25 |
Revaluation of a Fully Reserved Asset
Example 4: You place an asset in service in Year 1, Quarter 1. The asset cost is $10,000, the life is 5 years, and you are using straight-line depreciation. The asset's life extension factor is 2 and the maximum fully reserved revaluations allowed for this book is 3.
In year 5, quarter 4 the asset is fully reserved. In Year 9, Quarter 1 you want to revalue the asset with a revaluation rate of 5%.
Revaluation Rules:
· Revalue Accumulated Depreciation = Yes
· Amortize Revaluation Reserve = No
First, Oracle Assets checks whether this fully reserved asset has been previously revalued as fully reserved, and that the maximum number of times is not exceeded by this revaluation. Since this asset has not been previously revalued as fully reserved, this revaluation is allowed.
The asset's new revalued cost is $10,500. The life extension factor for this asset is 2, so the asset's new life is 2 * 5 years = 10 years. Oracle Assets calculates depreciation expense over its new life of 10 years. Oracle Assets calculates the depreciation adjustment of $2,000 using the new 10 year asset life. It transfers the change in net book value to the revaluation reserve account.
Oracle Assets revalues the accumulated depreciation using the 5% revaluation rate. The change in net book value is transferred to the revaluation reserve account. Since you do not amortize the revaluation reserve, the amount remains in the revaluation reserve account.
The effect of the revaluation is illustrated in the following table:
| Period (Yr, Qtr.) | Asset Cost | Deprn. Expense | Accum. Deprn. | Reval. Reserve |
| Yr1 to Yr4 | | | | |
| Yr5,Q1 | 10,000.00 | 500.00 | 8,500.00 | 0.00 |
| Yr5,Q2 | 10,000.00 | 500.00 | 9,000.00 | 0.00 |
| Yr5,Q3 | 10,000.00 | 500.00 | 9,500.00 | 0.00 |
| Yr5,Q4 | 10,000.00 | 500.00 | 10,000.00 | 0.00 |
| Reval. 5% | 10,500.00 | 0.00 | *8,400.00 | **2,100.00 |
| Yr9,Q1 | 10,500.00 | ***262.50 | 8,662.50 | 2,100.00 |
| Yr9,Q2 | 10,500.00 | 262.50 | 8,925.00 | 2,100.00 |
| Yr9,Q3 | 10,500.00 | 262.50 | 9,187.50 | 2,100.00 |
| Yr9,Q4 | 10,500.00 | 262.50 | 9,450.00 | 2,100.00 |
| Yr10,Q1 | 10,500.00 | 262.50 | 9,712.50 | 2,100.00 |
| Yr10,Q2 | 10,500.00 | 262.50 | 9,975.00 | 2,100.00 |
| Yr10,Q3 | 10,500.00 | 262.50 | 10,237.50 | 2,100.00 |
| Yr10,Q4 | 10,500.00 | 262.50 | 10,500.00 | 2,100.00 |
| Account Description | Debit | Credit |
| Asset Cost | 500.00 | |
| Accumulated Depreciation | 1,600.00 | |
| Revaluation Reserve | | 2,100.00 |
Revaluation with Life Extension Ceiling
Example 5: You place an asset in service in Year 1, Quarter 1. The asset cost is $10,000, the life is 5 years, and you are using straight-line depreciation. The asset's life extension factor is 3.0 and its life extension ceiling is 2.
In Year 5, Quarter 4 the asset is fully reserved. In year 9, quarter 1 you want to revalue the asset with a revaluation rate of 5%.
Revaluation Rules:
· Revalue Accumulated Depreciation = Yes
· Amortize Revaluation Reserve = No
To determine the depreciation adjustment, Oracle Assets uses the smaller of the life extension factor and the life extension ceiling. Since the life extension ceiling is smaller than the life extension factor, Oracle Assets uses the ceiling to calculate the depreciation adjustment. The new life used to calculate the depreciation adjustment is 2 * 5 years = 10 years, the life extension ceiling of 2 multiplied by the original 5 year life of the asset.
Oracle Assets calculates the asset's depreciation expense under the new life of 10 years up to the revaluation period, and moves the difference between this value and the existing accumulated depreciation from accumulated depreciation to revaluation reserve.
Oracle Assets then determines the new asset cost using the revaluation rate of 5% and revalues the accumulated depreciation with the same rate. Oracle Assets calculates the asset's new life by multiplying the current life by the life extension factor. The asset's new life is 3 * 5 years = 15 years. Oracle Assets bases the new depreciation expense on the revalued net book value and the new 15 year life.
The effect of the revaluation is illustrated in the following table:
| Period (Yr, Qtr.) | Asset Cost | Deprn. Expense | Accum. Deprn. | Reval. Reserve |
| Yr1 to Yr4 | | | | |
| Yr5,Q1 | 10,000.00 | 500.00 | 8500.00 | 0.00 |
| Yr5,Q2 | 10,000.00 | 500.00 | 9000.00 | 0.00 |
| Yr5,Q3 | 10,000.00 | 500.00 | 9,500.00 | 0.00 |
| Yr5,Q4 | 10,000.00 | 500.00 | 10,000.00 | 0.00 |
| Reval. 5% | 10,500.00 | 0.00 | *8,400.00 | **2,100.00 |
| Yr9,Q1 | 10,500.00 | ***75.00 | 8,475.00 | 2,100.00 |
| Yr9,Q2 | 10,500.00 | 75.00 | 8,550.00 | 2,100.00 |
| Yr9,Q3 | 10,500.00 | 75.00 | 8,625.00 | 2,100.00 |
| Yr9,Q4 | 10,500.00 | 75.00 | 8,700.00 | 2,100.00 |
| Yr10 to Yr15 | | | | |
Depreciation Adjustment (calculated using life extension
ceiling)= 2,000
| Account Description | Debit | Credit |
| Asset Cost | 500.00 | |
| Accumulated Depreciation | 1,600.00 | |
| Revaluation Reserve | | 2,100.00 |
Revaluation with a Revaluation Ceiling
Example 6: You own an asset which has been damaged during its life. You placed the asset in service in Year 1, quarter 1. The asset cost is $10,000, the life is 5 years, and you are using straight-line depreciation. You entered a revaluation ceiling of $10,300 for the asset.
In year 3, quarter 3 you revalue the asset's category with a revaluation rate of 5%.
Revaluation Rules:
· Revalue Accumulated Depreciation = No
· Amortize Revaluation Reserve = Yes
If Oracle Assets applied the new revaluation rate of 5%, the asset's new cost would be higher than the revaluation ceiling for this asset, so instead Oracle Assets uses the ceiling as the new cost. The ceiling creates the same effect as revaluing the asset at a rate of 3%. Oracle Assets bases the asset's new depreciation expense on the revalued asset cost.
The effect of the revaluation is illustrated in the following table:
| Period (Yr, Qtr.) | Asset Cost | Deprn. Expense | Accum.Deprn. | Reval. Amortize | Reval. Reserve |
| Yr1 to Yr 2 | | | | | |
| Yr3,Q1 | 10,000.00 | 500.00 | 4,500.00 | 0.00 | 0.00 |
| Yr3,Q2 | 10,000.00 | 500.00 | 5,000.00 | 0.00 | 0.00 |
| Reval. *3% | 10,300.00 | 0.00 | 0.00 | 0.00 | **5,300.00 |
| Yr3,Q3 | 10,300.00 | ***1,030.00 | 1,030.00 | ****530.00 | 4,770.00 |
| Yr3,Q4 | 10,300.00 | 1,030.00 | 2,060.00 | 530.00 | 4,240.00 |
| Yr4,Q1 | 10,300.00 | 1,030.00 | 3,090.00 | 530.00 | 3,710.00 |
| Yr4,Q2 | 10,300.00 | 1,030.00 | 4,120.00 | 530.00 | 3,180.00 |
| Yr4,Q3 | 10,300.00 | 1,030.00 | 5,150.00 | 530.00 | 2,650.00 |
| Yr4,Q4 | 10,300.00 | 1,030.00 | 6,180.00 | 530.00 | 2,120.00 |
| Yr5,Q1 | 10,300.00 | 1,030.00 | 7,210.00 | 530.00 | 1,590.00 |
| Yr5,Q2 | 10,300.00 | 1,030.00 | 8,240.00 | 530.00 | 1,060.00 |
| Yr5,Q3 | 10,300.00 | 1,030.00 | 9,270.00 | 530.00 | 530.00 |
| Yr5,Q4 | 10,300.00 | 1,030.00 | 10,300.00 | 530.00 | 0.00 |
| Account Description | Debit | Credit |
| Asset Cost | 300.00 | |
| Accumulated Depreciation | 5,000.00 | |
| Revaluation Reserve | | 5,300.00 |
Oracle Assets creates the following journal entries each period to amortize the revaluation reserve:
| Account Description | Debit | Credit |
| Revaluation Reserve | 530.00 | |
| Revaluation Amortization | | 530.00 |
6.At what level FA is implemented?
Ans) The fa is implemented at the business group level. Because for one business group there will be one asset module. The Asset module for the entire operating unit is same. But the Inventory org may different for the operating unit.
7.What is the profile used to secure asset register?
Ans) Information Standard 44 (IS44) – Information custodianship, requires agencies to establish and maintain an information asset register. An information asset register lists the existing information assets across all of the business units within an organisation. It enables users of information to identify the available information resources from a single source and provides information custodians with an overview of the information assets under their care. An information asset register ensures that agency information is identified, defined and organised in a way that will facilitate access to and reuse of this information. A register will assist to avoid any unnecessary duplication of information
8.What are the asset types in FA Module?
Ans)
1. Capitalised Asset.
2. Cip asset.
3.expenced asset.
9.What are the different calendars used in FA Module?
Ans)
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, and 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.
Your corporate books can share the same calendar. A tax book can have a different calendar than its associated corporate book. The calendar for a tax book must use the same fiscal year name as the calendar for the associated tax book.
The depreciation program uses the prorate calendar to determine the prorate period which is used to choose the depreciation rate. The depreciation program uses the depreciation calendar and divide depreciation flag to determine what fraction of the annual depreciation expense to take each period. For example, if you have a quarterly depreciation calendar, Oracle Assets calculates one-fourth of the annual depreciation each time you run depreciation.
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.
Attention: If you use this depreciation calendar in a depreciation book from which you create journal entries for your general ledger, you must make the period names identical to the periods you have set up in your general ledger.
You can define your calendar however you want. For example, to define a 4-4-5 calendar, set up your fiscal years, depreciation calendar, and prorate calendar with different start and end dates, and fill in the uneven periods. To divide annual depreciation proportionately according to the number of days in each period, enter By Days in the Divide Depreciation field in the Book Controls window.
Prerequisites
- Set up your Oldest Date Placed in Service. See: Specifying System Controls.
- Set up your fiscal years. See: Creating Fiscal Years.
To specify dates for calendar periods:
- Open the Asset Calendars window.
- Enter the name of your Calendar.
Suggestion: The name you enter appears in List of Values windows which allow no more than 15 spaces. You may want to limit your name to 15 characters.
- Choose Fiscal or Calendar to append either the fiscal or calendar year to get the accounting period name. If you do not want the fiscal or calendar year automatically appended, choose None.
For example, if your fiscal year runs from June 1 to May 31, and the current date is July 15, 1995, you are in calendar 1995 and fiscal 1996. If you specify FISCAL, your period name is JUL-96. If you specify CALENDAR, your period name is JUL-95.
- Enter the Fiscal Year Name you want to use for this calendar.
- Enter the number of periods in the fiscal year for this calendar.
Note: You cannot enter more than 365 periods per year.
- Enter the Name of this period.
If your periods include the year, such as JAN-1995, and you are using the hyphen (-) as the suffix delimiter, you must use either a two or four-digit year suffix. Oracle Assets automatically adds a four-digit year to the end of the period name if you do not enter a year. Otherwise, you can enter a two-digit year suffix.
If you use this depreciation calendar in a depreciation book from which you create journal entries for your general ledger, you must make the period names identical to the periods you have set up in your general ledger.
- Enter the start and end dates of this period.
- Save your work.
To change period names for future periods:
Note: Use this procedure if you have already created periods, but need to change them to correspond with GL periods. You can only change the names of future period names.
- Open the Asset Calendars window.
- Query the calendar for which you want to change period names and scroll to the last period.
- From the Main menu, select Edit/Delete Record. Delete all of the periods you plan to rename.
- Reenter the deleted periods with the correct name.
