Allocating Asset Depreciation Expenses

This chapter provides an overview of allocating depreciation expenses, describes the prerequisite tasks, and describes how to:

• Set up the depreciation allocation process.

• Run the allocation process.

Understanding the Depreciation Allocation Business Process

PeopleSoft Asset Management enables you to allocate depreciation expenses or asset costs across multiple departments or ChartField combinations. The allocation might be divided equally among all departments or selected ChartField combinations, or it might be calculated on a factor that is appropriate to your business, such as a prorata basis.

In some business environments, allocation of depreciation expenses to departments or ChartField combinations other than those assigned to an asset’s cost might be required. For example, depreciation expenses for shared services assets such as HVAC (Heating, Ventilation, Air Conditioning) for a store in a mall might be needed to allocate the expenses across all departments using the service. The allocation might be spread evenly among all departments, or it might be calculated on a prorata basis based on the square footage of each department or some other factor.

PeopleSoft Asset Management enables you to create and process allocations before posting depreciation to the general ledger. Allocation amounts are derived in PeopleSoft Asset Management from the DIST_LN table, which is populated by accounting entry generation programs such as the Accounting Entry Creation process (AM_AMAEDIST) and the Depreciation Close process (AM_DPCLOSE). The allocation process must be run after running these programs and before journal generation. The allocation program takes unposted journal lines from the DIST_LN table, processes them according to the defined allocation, and creates new allocation entries. Also, lines that have already been sent to the general ledger by previous journal generation are available to allocate.

Processing Allocations With Fund Accounting

When an educational or governmental entity acquires a capital asset, the transaction is usually accounted for as a budgeted or funded acquisition. Other programs within PeopleSoft provide the tools to perform budget checking, such as in the Purchase Order and Accounts Payable transaction processing. After the transaction to acquire the asset is completed, PeopleSoft Asset Management creates ongoing depreciation transactions. It is important that the asset depreciation entries do not inherit the original budget reference during creation of period depreciation entries because the original budget reference is not appropriate for future year’s depreciation.

For example, assume that the current financial year is 2006 with budget year of 2005. An asset was added on 01/01/2003 with a budget year of 2003. All of the depreciation rows for 2006 are created with the budget year of 2003. When the depreciation entries for 2006 are posted to the general ledger, they have an incorrect budget year of 2003.

To accommodate the use of budget or fund accounting in PeopleSoft Asset Management, it is recommended that you use the allocation process to reallocate the depreciation and other transactions to the active budget reference and year. This program is run after the accounting entry creation process and depreciation close process have been run.

Prerequisites

You must have already defined transaction groups to set up the allocation basis for asset costs and depreciation. If you use budget or fund accounting, it is recommended that you establish an asset or budget reallocation transaction group, such as All to include all transaction types that apply, such as ADD, DPR, PDP, RCT, RET, and TRF.

See Also

Establishing Asset Processing

Setting Up Accounting Entry and Financial Processing for PeopleSoft Asset Management

Setting Up Depreciation Processing

Setting Up the Depreciation Allocation Business Process

Use the Allocation Basis Group component (ALLOC_BASIS_GRP) to set up the Depreciation Allocation business process:

• Define the allocation basis, which determines how and in what proportion the journal line amounts are distributed to various targets.

• Define the sources and destinations for the cost/depreciation to be allocated.

• Link assets to a defined allocation basis.

Pages Used to Set Up the Depreciation Allocation Business Process

Entering the Allocation Basis Definition

Access the Allocation Basis Definition - Definition page.

Transaction Group	Select a transaction group which combines depreciation types for allocating expenses. In the case of using budget or fund accounting, select the transaction group that is used for budget or fund reallocations.
Allocation Type	Select one: Copy: Select to override a value so that ownership can be assigned (for example, to one department while expense is charged to another department). Evenly: Select to distribute the Total Allocation Units equally among the allocation destinations. Prorata: Select to distribute the Total Allocation Units in the way you specify in the Destination group box on the Allocation Basis Definition - Allocations page. Note. If you select Prorata as the allocation type, enter a Unit of Measure and the number of Total Allocation Units.
Unit of Measure	If you select Prorata as the allocation type, enter a unit of measure. This is the criteria you are going to use to do the allocation.
Total Allocation Units	The total quantity of your units of measure that are used to perform the allocation. You enter the allocation units for each destination to establish the allocation ratio for each destination.

Defining the Source and Destinations

Access the Allocation Basis Definition - Allocations page.

Complete the applicable ChartField sources and destinations.

If you are using a prorata allocation, enter the Allocation Units for each destination in the Destination group box.

Defining Allocations for Assets

Access the Define Allocations for Asset page.

Specify the criteria for the allocation by selecting the ChartFields to which you will associate the criteria. To generate proper search results for asset IDs, first populate one or all of the following fields:

• Book Name

• Category

• Cost Type

• Oper Unit

• Fund

• Dept (department)

• Program

• Class

• Bud Ref (budget reference)

• Product

• Project

Note. The system might not display all ChartFields. The available ChartFields are dependent upon the definitions that you have created during implementation.

Within the group box on the page, you can also associate each Asset ID with an Allocation Basis Id .

When using budget or fund accounting, define the assets against which allocations should be run. For example, include all assets that pertain to the budget reference year 2001. After running the accounting entry generation process (AM_AMAEDIST) and the depreciation close (AM_DPCLOSE) process, the Depreciation Allocation (AMALLOC) process with the appropriate budget Allocation ID can be run for the applicable fiscal year and period.

Performing the Depreciation Allocation Business Process

You can create allocation entries in the DIST_LN table by running the Depreciation Allocation (AMALLOC) process.

Note. The allocations process calls the centralized processor to generate balanced Inter/IntraUnit entries.

See Also

Using Interunit and Intraunit Accounting and ChartField Inheritance

Page Used to Run the Depreciation Allocation Business Process

Running the Depreciation Allocation Process

Access the AM Period Allocation page.

Enter a Business Unit,Allocation Id, and Accounting Period to process allocations. Select a Process Frequency.

When processing for budget and fund accounting allocations, first run the accounting entry generation process (AM_AMAEDIST) and the depreciation close (AM_DPCLOSE) process. Then run the Depreciation Allocation (AMALLOC) process with the appropriate budget Allocation ID for the applicable fiscal year and period. These steps will change the entries to reflect the correct budget reference in the accounting entries for assets that were created in prior fiscal year and period.