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   To enter default depreciation rules for a category:

1. In the Default Depreciation Rules window, enter the date Placed in Service range for which these category defaults are effective. When you add an asset, the depreciation rules default according to the date placed in service of the asset, the category, and the book.

You can specify as many ranges of default depreciation rules as you wish. If you leave the end date blank, Oracle Assets uses that set of depreciation rules indefinitely. To add a new range of valid depreciation rules, terminate your current record by adding an end date, then choose Edit, New Record from the menu to add the new record.

2. Check Depreciate if you normally depreciate assets in this book and category.

Note: Oracle Assets does not depreciate EXPENSED assets, regardless of the default value you enter in this field.

3. Enter the depreciation Method that you normally use for assets in this book and category:

• If you enter a life-based method, you must enter the asset Life in Years and Months. The method you enter must have the same number of periods as the prorate calendar for this book.

• If you enter a flat-rate method, you must enter default values for the Basic Rate and Adjusted Rate that you normally use to depreciate assets in this book and category. If you are defining this category for a tax book, you also can enter a Bonus Rule.

• If you enter a units of production method, you must enter the unit of measure (UOM) and production Capacity that you normally use to depreciate assets in this book and category. If you are defining this category a tax book, enter the UOM and capacity you entered for the corporate book.

4. Enter the Prorate Convention and Retirement Convention that you normally assign to assets in this book and category.

5. If you chose Use Default Percent from the Salvage Value poplist in the Book Controls window for this book, you can enter a Default Salvage Value percentage for this category, book, and range of dates placed in service. See: Entering Accounting Rules for a Book and Defaulting Asset Salvage Value as a Percentage of Cost.

For example, if you want the salvage value to default to 10% of the cost, enter 10 in this field. When you perform transactions affecting asset cost, Oracle Assets uses this default percentage to calculate the salvage value according to the following formula:

6. If you are defining this category for a tax book, optionally enter either a depreciation expense or cost ceiling.

7. Enter a Price Index if you want to run reports that use the revalued asset cost to calculate gains and losses.

8. Enter a default subcomponent life Rule you want to use to determine the default life of the subcomponent asset based on the life of the parent asset.

Choose one of the following rules:

None (Leave field blank): There is no connection between the life of the subcomponent asset and the parent asset life. Oracle Assets defaults the subcomponent asset life from the asset category.

Same End Date (Without specifying a minimum life): The subcomponent asset becomes fully depreciated on the same day as the parent asset or at the end of the category default life, whichever is sooner. The default subcomponent asset life is based on the end of the parent asset life and the category default life. If the parent asset is fully reserved, Oracle Assets gives the subcomponent asset a default life of one month.

Same End Date (Specifying a minimum life): The subcomponent asset becomes fully depreciated on the same day as the parent asset, unless the parent asset life is shorter than the minimum life you specify. The subcomponent asset's life is determined based on the end of the parent asset's life, the category default life, and the minimum life. If the parent asset's remaining life and the category default life are both less than the minimum life you enter, Oracle Assets uses the minimum life for the subcomponent asset. Otherwise, it uses the lesser of the parent asset's remaining life and the category default life.

Same Life: The subcomponent asset uses the same life as the parent asset. It depreciates for the same total number of periods. If the subcomponent asset is acquired after the parent asset, it depreciates beyond the end date of the parent asset life.

9. If you choose Same End Date for the subcomponent life rule, you also can specify a minimum life for the subcomponent asset.

If the parent asset's remaining life and the category default life are both less than the minimum life you enter, Oracle Assets uses the minimum life for the subcomponent asset. Otherwise, it uses the lesser of the parent asset's remaining life and the category default life.

10. Check Straight Line for Retirements if you are setting up an asset category with a 1250 property class in a tax book. Oracle Assets uses a straight-line depreciation method in determining the gain or loss resulting from the retirement of 1250 (real) property.

If you check Straight Line For Retirements, enter the straight-line depreciation Method and Life you want to use for the Gain From Disposition of 1250 Property Report. This is the default method for your asset in the Retirements window and in the tax book if you use mass copy.

11. Check the Use Depreciation Limit check box if you want to depreciate an asset beyond the recoverable cost in the years following the useful life of the asset. You can enter the default Depreciation Limit as a percentage or amount. See: Depreciating Assets Beyond the Useful Life.

12. Enter the minimum time you must hold an asset for Oracle Assets to report it as a capital gain when you retire it.

If you want Oracle Assets to report a capital gain for all assets in this category when you retire them, enter zero. If you want to report a capital gain for assets which you have held for at least one year, such as for United States federal tax form 4797, enter one in the Years field and zero in the Months field. If you need a different capital gains threshold for different dates placed in service, such as for United States federal tax form 4797, set up the asset category several times for the different date placed in service ranges.

13. If you are defining this category for a tax book, indicate whether assets in this category are eligible for Investment Tax Credit (ITC), and whether assets in this category Use ITC Ceilings.

14. Save your work.

See Also

Defining Depreciation Books

Defining Additional Depreciation Methods

Defining Units of Measure

Defining Depreciation Bonus Rules

Defining Price Indexes

Setting Up Depreciation Ceilings

Depreciation Rules (Books)

Prorate and Retirement Conventions

Parent Asset Transactions Report

Form 4797 Reports

Asset Category Listing