FA THEORY

Introduction:

 Fixed Assets is a standalone application.

 This will come at Ledger/PL level.

 Key Flex Fields in Fixed Assets:

1. Category KFF
2. Asset Location KFF
3. Asset Key KFF

 We can create only one structure by using the above KFF

 Based on the asset life we have to create Fiscal Calendar. For example
1976 to 2030.

 Depreciation calendar is used to calculate depreciation.

 Prorate convention calendar is used to prorate the depreciation from

which date to which date we have to consider.

 Massadditions: we can add the assets from AP to FA,

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 interface tables.
AP -- FA Mass additions interface tables ---- FA
Asset lines transfer to GL
1. By running Mass addition create program we can transfer asset
information AP to FA
2. By running Prepare mass addition we can assign category location

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3. By running the post Mass additions asset line converted into Asset
system will assign Unique no to asset.
between AP to FA interfaces are "FA Mass additions interface tables"

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.

 For Quick addition of Assets, only basic information is required.

ex-Asset name, cost, Depreciation
 For detailed additions: list of information is required like: Asset
category, Asset name, asset model, LIC, Leseno 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.

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 Depreciation calculation is in 3 methods:

1. Straight line method
2. Diminition method
3. Production based

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

 Diminition method: depreciation will be calculated on current 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

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

 Asset transfer can be done between Locations, Employees, and

Accounts.

 Asset Changes: through this changes we can change the:

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- Depreciation
- Prorate Convention
- Cost Adjustment
- Life time of Assets

 Asset reclassification is used to reclassify the assets from one category

to another category.

 Projection: Through the projections we can have an idea of the future

depreciation. We can see the depreciation of an asset for the future
period also.

 What-if-analysis: with if analysis we can analyze the differences

between two different depreciation methods.

 Overridedepreciation: 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

override the depreciation. Override the depreciation where there is
unplanned activity takes place. System will consider first over ride
depreciation and then original depreciation.

 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.

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 Rollbackdepreciation: 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”.

 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.

 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 3types of books:

1. Corporate Book
2. Tax Book

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3. Budget Book

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

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

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

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 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.

 Accumulated Depreciation: Total depreciation from beginning of the

asset to till date.
 YTD depreciation: For particular year
 Depreciation: For particular period.

 Physical Inventory: Process of verification assets information in the

Oracle system with the Physical assets.

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

Example:

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.

 Merge: Merge is a process of adding multiple assets to a single Asset.

Example:
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.

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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 FAotherwise 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.

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• 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.

PRORATE CONVENTION CALENDAR

Navigation:
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

Setup  Asset System  Book Controls

This window has 3 Tabs:

1. Calendar
2. Accounting Rules
3. Natural Accounts

 Enter the name of the book you want to define.

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 Choose Class as “Corporate”

Complete 3 Tabs

ASSET CATEGORIES
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:

 Set up Category Flex Field

 Set up depreciation Book

 Setup Depreciation Calendar & Prorate Convention Calendar

 Setup Depreciation Methods

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

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

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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

 Choose Depreciation Method & Rate

 Choose Prorate Convention Calendar & Retirement Convention

Calendar

Save

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IMPORTANT REPORTS IN FIXED ASSETS

1.Asset transfers report

2.Asset retirement report

3. Asset reclassification report

4. Asset by category 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.Mass additions validity report

11.Cost adjustment report
12.CIP Asset report
13.CIP capitalization report
14.Unplanned depreciation

15. Asset Additions by cost center report

16.Asset retirement by cost center report

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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  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 RequestCreate
Journal Entries in Fixed Asset. Choose the Corporate Book and
period for parameters as shown below.

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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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