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Defaulting Asset Salvage Value as a Percentage of Cost

You can default the salvage value of your assets as a percentage of cost, according to percentages you define for each category and book. Oracle Assets uses the defaults whether you add assets manually, automatically, or using Mass Additions. You can override the default value using the Detail Additions process. You also can adjust the default salvage value after an asset has been added. The following transactions affect salvage value:

Transfers, retirements, and reclassifications do not affect asset salvage value.

You define a default salvage value percentage for a particular category, book, and range of dates placed in service in the Asset Categories window. See: Entering Default Depreciation Rules for a Category.

When you perform transactions that affect asset cost, Oracle Assets uses this default percentage to calculate the salvage value according to the following formula:

Salvage Value = Cost X Default Percentage

Additions

When you add an asset using Mass Additions or QuickAdditions, Oracle Assets calculates the default salvage value using the cost you enter and the default salvage value percentage. If you do not specify a default percentage, Oracle Assets uses a default salvage value of zero. To change the salvage value, make a salvage value adjustment in the Books window of the Asset Workbench. See: Changing Financial and Depreciation Information.

You can override the default salvage value when you add the asset during Detail Additions. Oracle Assets displays the calculated salvage value, and you can change it to a different amount if necessary.

For example, you define the AUTO.LUXURY category as follows:

You then add a luxury automobile to the US CORP book:

The default salvage value is 50,000 X 5% = 2,500 USD.

Adjustments

If you adjust the cost of an asset or perform another transaction which affects asset cost, such as adding an invoice line, Oracle Assets recalculates the salvage value using the new cost.

For example, in 1997 you buy a new radio for the luxury automobile you added to the US CORP book. To record this cost, you add an invoice of 500 USD. The adjusted cost is 50,500 USD, and the new salvage value is 50,500 X 5% = 2525 USD.

Mass Copy

When you Mass Copy additions, cost adjustments, or salvage value adjustments to a tax book, there are three strategies by which you can affect asset salvage value in your tax book. You must choose one of these strategies when you enable Mass Copy for a book in the Book Controls window. You can choose one of the following options from the Salvage Value poplist: Copy, Do Not Copy, and Use Default Percent. See: Entering Accounting Rules for a Book.

In Example 1, 2, and 3, the following rules apply for the US TAX book:

Example 1: Mass Copying an Addition

In Q1-95, you add a luxury automobile to the US CORP book. The cost is 100,000 USD, and the salvage value is 15,000 USD. You mass copy this transaction to the US TAX book in the same quarter.

If You Use This Mass Copy Strategy... The New Salvage Value in US TAX Is...
 
Copy 15,000 USD
Do Not Copy 0 USD
Use Default % 100,000 X 10% = 10,000 USD

Example 2: Mass Copying a Cost Adjustment

You place an asset in service in the US CORP and US TAX books as follows:

  US CORP US TAX
 
Category AUTO.LUXURY AUTO.LUXURY
Date in Service 16-DEC-1995 16-DEC-1995
Cost 25,000 USD 25,000 USD
Salvage Value 2500 USD 1250 USD

You adjust the asset cost in the US CORP book to 20,000 USD, leaving the salvage value at 2500 USD. You then Mass Copy the cost adjustment to the US TAX book.

If You Use This Mass Copy Strategy... The New Salvage Value in US TAX Is...
 
Copy 2500 USD
Do Not Copy 1250 USD
Use Default % 20,000 X 10% = 2000 USD

Note: Oracle Assets only mass copies the cost adjustment if the cost is the same in both books before the adjustment.

Example 3: Mass Copying a Salvage Value Adjustment

You place an asset in service in the US CORP and US TAX books as follows:

  US CORP US TAX
 
Category AUTO.LUXURY AUTO.LUXURY
Date in Service 16-DEC-1995 16-DEC-1995
Cost 25,000 USD 25,000 USD
Salvage Value 1250 USD 1250 USD

You adjust the salvage value in the US CORP book to 1000 USD (cost remains 25,000 USD). You Mass Copy the salvage value adjustment to the US TAX book.

If You Use This Mass Copy Strategy... The New Salvage Value in US TAX Is...
 
Copy 1000 USD
Do Not Copy 1250 USD
Use Default % 25,000 X 10% = 2500 USD

Note: Oracle Assets only mass copies the adjustment if the salvage value is the same in both books before the adjustment.

See Also

Entering Accounting Rules for a Book

Entering Default Depreciation Rules for a Category

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