Annuity Fixed Assets Depreciation Method

Configure and assign an annuity depreciation method to fixed assets using a formula-based depreciation method. Oracle Assets calculates depreciation expense and interest expense for the interest lost on the opportunity cost of capital.

This feature can be enabled for select asset books that require fixed assets to depreciate under the annuity depreciation method.

View of Asset Book Setup

View of Asset Book Setup

Enter the following annuity depreciation attributes when you assign asset categories to your asset book.

  • Annuity Expense Account and Annuity Income Account: These accounts are used to account for the interest amount calculated. These accounts can be profit and loss accounts and can be updated at any time.
  • Depreciation Method and Annuity Interest Rate: Select the annuity depreciation method and annuity interest rate that need to be defaulted when assets are added to this category.

View of Category Setup

View of Category Setup

View of Asset Cateogry Default Rules

View of Asset Category Default Rules

Set up an annuity depreciation method with the method name 'ANNUITY' for all your asset's useful life.

View of Annuity Depreciation Method Setup

View of Annuity Depreciation Method Setup

Business Benefits:

  • Enables public sector entities to calculate depreciation expense according to the annuity depreciation method calculation guidelines.
  • In contrast to conventional depreciation methods, the annuity depreciation method incorporates the interest on the capital invested in the asset.

Steps to Enable

Use the Opt In UI to enable this feature. For instructions, refer to the Optional Uptake of New Features section of this document.

Offering: Financials  No Longer Optional From: Update 25B

Go to Manage Asset Books setup task and enable 'Allow annuity depreciation' option for your asset book.

Tips And Considerations

  • Enable the annuity depreciation method for the books with monthly depreciation and prorate calendars.
  • The annuity interest rate should be a positive value.
  • Enter the annuity interest rate of 8% as 8 in the Edit Asset Category, Add Asset, Edit Source Line, and Change Financial Details pages, and Add Asset and Adjust Assets spreadsheets.
  • Enter the annuity interest rate of 8% as 0.08 in File-Based Data Import (FBDI) templates.
  • Use a single depreciation method named ANNUITY and add as many useful lives as needed.

Key Resources

  • Oracle Support Note:: New Feature On 24C : Annuity Depreciation Method (Doc ID 3022005.1)