Depreciation

This chapter covers the following topics:

Running Depreciation

Run depreciation to process all assets in a book for a period. If you have assets that have not depreciated successfully, these assets are listed in the log file created by Oracle Assets when you run depreciation.

Closing a Depreciation Period

When you run depreciation, Oracle Assets gives you the option of closing the current period if you check the Close Period check box on the Run Depreciation window. If all of your assets depreciate successfully, Oracle Assets automatically closes the period and opens the next period for the book. If you do not check the Close Period check box when you run depreciation, Oracle Assets does not close the period.

Once depreciation has been processed for an asset in the current open period, you cannot perform any transactions on those assets unless depreciation is rolled back or the current period is closed. See: Rolling Back Depreciation.

Note: Ensure that you have entered all transactions for the period before you run depreciation. Once the program closes the period, you cannot reopen it.

Multiple Reporting Currencies

If you are using Multiple Reporting Currencies (MRC), you can only run the Calculate Gains and Losses and depreciation programs using the standard Fixed Assets or MRC primary responsibility. You cannot run these programs using an MRC reporting responsibility.

When you run the Calculate Gains and Losses and depreciation programs using the standard Fixed Assets or MRC primary responsibility, these program will also run automatically for the associated reporting responsibilities. See: Multiple Reporting Currencies in Oracle Applications, Multiple Reporting Currencies in Oracle Applications.

Prerequisites

To run depreciation:

  1. Open the Run Depreciation window.

  2. Choose the Book for which you want to run depreciation.

  3. Choose whether you want Oracle Assets to close the period after successfully depreciating all assets.

  4. Choose Run to submit concurrent requests to run the calculate gains and losses, depreciation, and reporting programs.

    Note: You cannot enter transactions for the book while depreciation is running.

    Oracle Assets automatically runs the Journal Entry Reserve Ledger report when you run the depreciation program for a corporate book, and the Tax Reserve Ledger report for a tax book, so you can review the depreciation calculated. These reports are run automatically for the primary currency only. You can use the Standard Report Submission (SRS) process to manually run these reports for the reporting currencies.

  5. Review the log files and report after the request completes.

  6. If the log file lists assets that did not depreciate successfully, correct the errors and re-run depreciation.

Related Topics

Depreciation Calculation

Depreciation Reports

Submitting a Request, Oracle Applications User's Guide

Rolling Back Depreciation

Rolling Back Depreciation

Depreciation rollback restores assets to their state prior to running depreciation. For example, you may have outstanding adjustments or transactions that you need to process for a period. However, you have already run depreciation for that period. If the Close Period check box was not checked when you ran depreciation, depreciation is automatically rolled back when you process transactions on these assets.

Financial adjustments and other transactions can be made to one or more assets through the asset workbench, Mass Transactions or Depreciation Override window. Oracle Assets will automatically rollback depreciation on the selected assets and allow the transactions to be processed normally. The assets for which depreciation was rolled back are automatically included in the next depreciation run.

Depreciation is rolled back automatically by Oracle Assets provided the following conditions are met:

Related Topics

Running Depreciation

Depreciation Calculation

Depreciation Reports

Depreciation Override

Depreciation Override allows you to optionally override the depreciation amounts calculated by Oracle Assets. Using this feature, you can manually override the calculated default depreciation amounts for standalone and group assets.

Before running depreciation or performing adjustments, you must provide the necessary information in the Depreciation Override window or the FA_DEPRN_OVERRIDE table, and indicate whether the override data is for depreciation or adjustments. When running depreciation, the system will upload and use the depreciation amounts provided in the interface table.

If you do not use the Depreciation Override window to input the override amounts, you must first populate the FA_DEPRN_OVERRIDE table with the necessary depreciation data. Next, the feature uploads and overrides the system calculated depreciation amounts with the amounts you provided in the override interface table.

Prerequisite

To override the system calculated depreciation amounts using the Depreciation Override window:

  1. Navigate to the Depreciation Override window.

  2. You can use the Find Assets window to find assets for which you want to change depreciation.

  3. If you did not use the Find Assets window, or query, to find the assets records you wish to modify, enter the asset number, book, and period of the asset in the rows of Depreciation Override window.

  4. In the Depreciation field, you can enter the override depreciation amount.

  5. In the Bonus Depreciation field you can enter the override bonus depreciation amount.

  6. In the Use By field, you can select the adjustment type of Depreciation or Adjustment. The default value is Depreciation when creating a new record.

  7. The Status field displays the current status of the override record, which may be New, Post, or Posted. If the status is Post or Posted, you cannot update the record, you can only delete the record and reenter the updated record.

  8. Select Save from the menu to save your work.

To override the system calculated depreciation amounts using the FA_DEPRN_OVERRIDE table:

  1. Define the override data in the FA_DEPRN_OVERRIDE table. In the FA_DEPRN_OVERRIDE table, enter all basic override depreciation information: BOOK_TYPE_CODE, ASSET_ID, PERIOD_NAME, DEPRN_AMOUNT, BONUS_DEPRN_AMOUNT and USED_BY. You can provide depreciation amounts for depreciation expense and bonus expense separately using the columns: DEPRN_AMOUNT and BONUS_DEPRN_AMOUNT. Define either DEPRECIATION or ADJUSTMENT in the USED_BY column depending on your requirement.

    Note: You can assign multiple override data for each asset as long as PERIOD_NAME and USED_BY do not overlap for records with a non-posted status.

  2. Optionally run What-If Analysis or Projection to review the estimated depreciation amounts for that period.

  3. Run Depreciation or perform adjustments (single asset adjustment and mass change) to incorporate the override data.

  4. If the override fails, the system will roll back the depreciation for the asset. You first need to correct the override information in the interface table, then rerun depreciation. For example, if any assets became over-reserved during the overriding process, the override will fail and the system will return an error.

Depreciation Example

The following table contains asset setup information used in this example.

Asset Setup Item Asset Setup Information
Book Type Code CORP
Asset Number ASSET-A (Asset ID: 100869)
Method Flat COST
Rate 10%
Bonus Rule 10%
Cost 1,000,000
Addition Date Qtr-2-95
Salvage Value 0

Load the following override data in the FA_DEPRN_OVERRIDE table before running depreciation:

BOOK_ TYPE_ CODE ASSET ID PERIOD NAME DEPRN_ AMOUNT BONUS_ DEPRN_ AMOUNT USED BY
CORP 100869 Qtr-2-1996 80,000 (NULL) DEPRECIATION
CORP 100869 Qtr-3-1996 (NULL) 50,000 DEPRECIATION
CORP 100869 Qtr-2-1997 100,000 0 DEPRECIATION
CORP 100869 Qtr-4-1998 (NULL) 0 DEPRECIATION
CORP 100869 Qtr-3-1999 (NULL) 20,000 DEPRECIATION

Expected depreciation results for Asset ID 100869 are included in the following table:

Fiscal Year 1995 1996 1997 1998 1999
Adjusted Cost 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Q1 0 50,000 50,000 50,000 50,000
Q2 50,000 105,000 100,000 50,000 50,000
Q3 50,000 75,000 50,000 50,000 45,000
Q4 50,000 50,000 50,000 25,000 0
Accumulated 150,000 430,000 680,000 855,000 1,000,000
Basic Rate 10% 10% 10% 10% 10%
Bonus Rate 10% 10% 10% 10% 10%

For this example:

Using the override feature, you can define the bonus amount even at the last period of life for the asset, provided ((Depreciation Reserve + Current Period Depreciation Total) = Adjusted Recoverable Cost). If the total of depreciation reserve and current period depreciation is greater than the adjusted recoverable cost, the system will return an error. Next, you need to correct the amount and run depreciation again.

Adjustment Example

The following table contains asset setup information used in this example.

Asset Setup Item Asset Setup Information
Book Type Code CORP
Asset Number ASSET-B (Asset ID: 100870)
Method Flat NBV
Rate 10%
Bonus Rule 0%
Cost 10,000
Addition Date Qtr-2-95
Salvage Value 0

Load the following override data in the FA_DEPRN_OVERRIDE table before performing the adjustment:

BOOK_ TYPE_ CODE ASSET ID PERIOD NAME DEPRN_ AMOUNT BONUS_ DEPRN_ AMOUNT USED BY
CORP 100870 Qtr-3-1995 0 1,000 ADJUSTMENT

Non-Override Example

For this example:

Expected depreciation results for Asset ID 100870 are included in the following table:

  1995 1996 1997
Adjusted Cost 10,000 18,500 17,400
Q1 0 1,213 (=463+750) 435
Q2 250 463 435
Q3 250 463 435
Q4 250 461 435
Accumulated 750 2,600 4,340
Basic Rate 10% 10% 10%
Bonus Rate 0% 0% 0%

Override Example

For this example:

Scenario:

The expected depreciation results for asset ID 100870 are included in the following table:

  1995 1996 1997
Adjusted Cost 10,000 17,500 16,500
Q1 0 2,188 (=438+1,750) 413
Q2 250 438 413
Q3 250 438 413
Q4 250 436 411
Accumulated 750 3,500 5.150
Basic Rate 10% 10% 10%
Bonus Rate 0% 0% 0%

As above, override effect will appear in the adjusted period, in this case, Qtr-1-96.

For this example:

The expected depreciation results for asset ID 100870 are included in the following table:

Fiscal Year 1995 1996 1997
Adjusted Cost 10,000 17,500 15,750
Q1 0 438 394
Q2 250 438 394
Q3 250 438 394
Q4 250 437 393
Accumulated 750 2,500 4,075
Basic Rate 10% 10% 10%
Bonus Rate 0% 0% 0%

In the above example:

Currently, Oracle Assets does not support bonus depreciation for back-dated amortized adjustments. If you provide override bonus depreciation amounts, and back-dated amortized adjustments are used, the override will fail with an error.

About the Depreciation Override Interface

You can use the Depreciation Override feature to manually override the default depreciation amounts calculated by Oracle Assets. The depreciation override information is loaded in the FA_DEPRN_OVERRIDE table. The necessary information must be loaded prior to depreciating or adjusting the assets that will have their depreciation overridden.

FA_DEPRN_OVERRIDE Interface Table

The database definition of the FA_DEPRN_OVERRIDE table does not require values for any columns. However, to properly override the system-calculated depreciation amounts, you should consider the points below:

Loading Depreciation Override Data

To use the Depreciation Override feature in Oracle Assets, you must load your depreciation override data into the FA_DEPRN_OVERRIDE table in Oracle Assets. The Usage column in the following table indicates whether a field is required, optional, or system-generated.

Column Name Type Description Usage
       
DEPRN_OVERRIDE_ID NUMBER(15) This is a unique identifier for the depreciation override records in this interface table. This number is automatically assigned to each record when you insert override data into this table. System-generated
BOOK_TYPE_CODE VARCHAR2(15) Use this column for the book that will receive the depreciation override. You must choose a book that you have set up in the Book Controls window, and the book class must be CORPORATE or TAX. Required
ASSET_ID NUMBER(15) This column is a unique identifier for assets. Required
PERIOD_NAME VARCHAR2(15) Use this column for the period on which you want to perform overriding the system-calculated depreciation amounts. Required
DEPRN_AMOUNT NUMBER Use this column to store the override depreciation amounts. This depreciation amount does not include bonus depreciation amounts. Optional
BONUS_DEPRN_ AMOUNT NUMBER Use this column to store the override bonus depreciation amounts. For assets with bonus depreciation, you need to set up the bonus rule for the asset as a prerequisite. Otherwise, depreciation and adjustments will fail with an error. You need to enter the overriding amount in either the DEPRN_AMOUNT or BONUS_DEPRN_AMOUNT column. Optional
SUBTRACTION_FLAG VARCHAR2(1) Do not use this column. Null
USED_BY VARCHAR2(15) Enter either DEPRECIATION or ADJUSTMENT in this column depending on the situation in which you want to use this data. Required
STATUS VARCHAR2(1) When you insert asset depreciation information into this table, it automatically assigns NEW in this status column. When depreciation or adjustments are performed, the status of the used record is updated to POSTED. You cannot delete any records with a POSTED status from this table. You can assign multiple override data for each asset, as long as the PERIOD_NAME and USED_BY do not overlap for records with a non-posted status. System-generated
TRANSACTION_HEADER_ID NUMBER(15) This column stores the TRANSACTION_HEADER_ID in the FA_TRANSACTION_HEADERS table. The number is automatically assigned to this column when you perform adjustments. System-generated
REQUEST_ID NUMBER(15) Use this column to store the REQUEST_ID if you use any loading program. Optional
PROGRAM_APPLICATION_ID NUMBER(15) Use this column to store the application ID if you use any loading program. Optional
PROGRAM_ID NUMBER(15) Use this column to store the request ID if you use any loading program. Optional
CREATED_BY NUMBER(15) Use the value 1 in this column, or the specific user ID of the person working on the import. Optional
CREATION_DATE NUMBER(15) Use this column for the date you load this asset into FA_DEPRN_OVERRIDE table. Optional

Import data from a non-Oracle system using SQL*Loader

You can use SQL*Loader to import depreciation override data by completing the following steps:

  1. Define your interim table in the Oracle database.

    Use a single interim table if possible. You can use multiple tables if the data exists in multiple tables or files in the system from which you are loading data. In either case, you must eventually place the data in a single table, the FA_DEPRN_OVERRIDE table.

    If you prefer, you can load data directly into the FA_DEPRN_OVERRIDE table, but it is more difficult due to the complexity of the table.

  2. Load your interim table using SQL*Loader.

    Use SQL*Loader to import information from outside your Oracle database. SQL*Loader accepts a number of input file formats and loads your depreciation override data into your interim table.

    If the data already resides within an Oracle database, there is no need to use SQL*Loader. Simply consolidate the depreciation override information in your interim table using SQL*Plus or import, and go directly to the next step.

    • Convert the depreciation override information into text form.

      Most database or file systems can output data in text form. Usually you can generate a variable or fixed format data file containing comma or space delimiters from the existing system. If you cannot find a way to produce clean text data, try generating a report to disk, using a text editor to format your data. Another option is to have SQL*Loader eliminate unnecessary information during its run. If there is a large volume of information, or if the information is difficult to convert into a loadable format, you can write your own import program. Construct your program to generate a SQL*Loader readable text file.

    • Create the SQL*Loader control file.

      In addition to the actual data text file, you must write a SQL*Loader control file. The control file tells SQL*Loader how to import the data into your interim table. Be sure to specify a discard file if you are planning to use SQL*Loader to filter your data.

    • Run SQL*Loader to import your depreciation override data.

      Once you have created your depreciation override data file and SQL*Loader control file, run SQL*Loader to import your data. SQL*Loader produces a log file with statistics about the import, a bad file containing records that could not be imported due to errors, and a discard file containing all the records that were filtered out of the import by commands placed in the control file.

  3. Compare record counts and check the SQL*Loader files.

    Check the number of rows in the interim table against the number of records in your original depreciation override data file or table to ensure that all depreciation override records were imported.

    The log file shows if records were rejected during the load, and the bad file shows which records were rejected. Fix and re-import the records in the bad file.

  4. Spot check the interim table.

    Check several records throughout the interim table and compare them to the corresponding records in the original data file or table. Look for missing or invalid data. This step ensures that your data was imported into the correct columns and that all columns were imported.

Basic Depreciation Calculation

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Prorate Date

Oracle Assets prorates the depreciation taken for an asset in its first fiscal year of life according to the prorate date. Oracle Assets calculates the prorate date when you initially enter an asset. The prorate date is based on the date placed in service and the asset prorate convention. For example, if you use the half-year prorate convention, the prorate date of all assets using that convention is simply the mid-point of your fiscal year. So assets acquired in the same fiscal year take the same amount (half a year's worth) of depreciation in the first year. If however, you use the following month prorate convention, the prorate date is the beginning of the month following the month placed in service, so the amount of depreciation taken for assets acquired in the same fiscal year varies according to the month they were placed in service.

Your reporting authority's depreciation regulations determine the amount of depreciation to take in the asset's first year of life. For example, some governments require that you prorate depreciation according to the number of months you hold an asset in its first fiscal year of life. In this case, your prorate convention has twelve rate periods--one for each month of the year. Other reporting authorities require that you prorate depreciation according to the number of days that you hold an asset in its first year of life. This means that the fiscal year depreciation amount would vary depending on the day you added the asset. Thus, your prorate convention contains 365 prorate periods--one for each day of the year.

Depreciation Rate

Calculation Basis

Oracle Assets calculates depreciation using either the recoverable cost or the recoverable net book value as a basis. If the depreciation method uses the asset cost, Oracle Assets calculates the fiscal year depreciation by multiplying the recoverable cost by the rate.

If the depreciation method uses the asset net book value, Oracle Assets calculates the fiscal year depreciation by multiplying the recoverable net book value as of the beginning of the fiscal year, or after the latest amortized adjustment or revaluation, by the rate.

Determining the Prorate Period

Oracle Assets uses the prorate date to choose a prorate period from the prorate calendar.

For life-based methods, the prorate period and asset age then determine which rate Oracle Assets selects from the rate table. The depreciation program calculates asset age from the date placed in service as the number of fiscal years that you have held the asset. If two assets are placed in service at different times, but have the same depreciation method and life, Oracle Assets uses the same rate table, but may choose a different rate from a different column and row in the table.

Flat-rate methods use a fixed rate and do not use a rate table.

Determining the Depreciation Rate

For life-based depreciation methods, Oracle Assets uses the depreciation method and life to determine which rate table to use. Then, it uses the prorate period and year of life to determine which of the rates in the table to use. Note that the life of an asset has more fiscal years than its asset calendar life if it is placed in service during a fiscal year.

Flat-rate depreciation methods determine the depreciation rate using fixed rates, including the basic rate, adjusting rate, and bonus rate.

Calculate Annual Depreciation

Calculated and table-based methods calculate annual depreciation by multiplying the depreciation rate by the recoverable cost or net book value as of the beginning of the fiscal year.

Flat-rate methods calculate annual depreciation as the depreciation rate multiplied by the recoverable cost or net book value, multiplied by the fraction of year the asset was held.

Allocate Annual Depreciation Across Periods

After calculating the annual depreciation amount, Oracle Assets uses your depreciation calendar, the divide depreciation flag, and the depreciate when placed in service flag to determine how much of the fiscal year depreciation to allocate to the period for which you ran depreciation.

If you choose to allocate depreciation evenly to each of your accounting periods, Oracle Assets divides the annual depreciation by the number of depreciation periods in your fiscal year to get the depreciation per period. If, however, you choose to allocate it according to the number of days in each period, Oracle Assets divides the annual depreciation by the number of days the asset depreciates in the fiscal year and multiplies the result by the number of days in the appropriate accounting period.

Spreading Depreciation Across Expense Accounts

Finally, Oracle Assets allocates the periodic depreciation to the assignments to which you have assigned the asset. Oracle Assets does this according to the fraction of the asset units that is assigned to each depreciation expense account in the Assignments window.

Related Topics

Depreciation Calculation for Flat-Rate Methods

Depreciation Calculation for Table and Calculated Methods

Depreciation Calculation for Units of Production Methods

Running Depreciation

Asset Accounting

Depreciation Rules (Books)

Assignments

Depreciation Calculation

Run the depreciation program independently for each of your depreciation books. The depreciation program calculates depreciation expense and adjustments, and updates the accumulated depreciation and year-to-date depreciation.

When you run depreciation, the depreciation program submits three separate requests to:

Depreciation Calendar

The depreciation calendar determines the number of accounting periods in your fiscal year.

Prorate Calendar

The prorate calendar determines what rate Oracle Assets uses to calculate annual depreciation by mapping each date to a prorate period, which corresponds to a set of rates in the rate table.

Period Close

Oracle Assets automatically closes the book's current period and opens the next when you run the depreciation program. You cannot have more than one open period for a given depreciation book.

Year-End Processing

You can close the year independently in each depreciation book. The depreciation program automatically resets year-to-date amounts on a book the first time the depreciation program is run on that book in a fiscal year. Oracle Assets automatically creates the depreciation and prorate periods for your new year when you run depreciation for the last period of the previous fiscal year.

Note: Verify the depreciation and prorate periods that Oracle Assets creates before you enter transactions in the new year.

Suspend Depreciation

You can suspend depreciation by unchecking Depreciate in the Books window. If you suspend depreciation of an asset when you add the asset, Oracle Assets expenses the missed depreciation in the period you start depreciating the asset.

For table and calculated methods, Oracle Assets calculates depreciation expense for the asset based on an asset life that includes the periods you did not depreciate it. If you suspend depreciation after an asset has started depreciating, Oracle Assets catches up the missed depreciation expense in the last period of life.

For flat-rate methods, Oracle Assets continues calculating depreciation expense for the asset based on the flat-rate. For flat-rate methods that use net book value, Oracle Assets uses the asset net book value at the beginning of the fiscal year in which you resume depreciation. The asset continues depreciating until it becomes fully reserved.

Recoverable Cost

For depreciation methods with a calculation basis of cost, Oracle Assets calculates depreciation using the recoverable cost. The recoverable cost is calculated as the lesser of either the cost less the salvage value less the investment tax credit basis reduction amount, or the cost ceiling. Oracle Assets depreciates the asset until the accumulated depreciation equals the recoverable cost.

Adjustments

The following are some examples of financial adjustments you can expense or amortize:

For more information about amortized and expensed adjustments and how they affect depreciation calculation, see Amortized and Expensed Adjustments.

Prior Period Transactions

Prior Period Additions

If you enter an asset with a date placed in service before the current accounting period, Oracle Assets automatically calculates the missed depreciation and adjusts the accumulated depreciation on the next depreciation run.

If you provide accumulated depreciation when you add the asset, Oracle Assets does not recalculate the accumulated depreciation. It accepts the amount you entered.

For table and calculated methods, even if the entered accumulated depreciation differs from what Oracle Assets would have calculated, Oracle Assets does not depreciate the asset beyond the recoverable cost. If the accumulated depreciation is too low, Oracle Assets takes additional depreciation in the last period of the asset's life so that the asset becomes fully reserved. If the asset's accumulated depreciation is too high, Oracle Assets stops depreciating the asset when it becomes fully reserved, effectively shortening the asset life.

Prior Period Transfers

If you back date an asset transfer, Oracle Assets automatically reallocates depreciation expense by reversing some of the depreciation charged to the "from" account, and redistributing it proportionally to the "to" accounts. Retroactive transfers do not impact the total depreciation. You cannot backdate a transfer to a prior fiscal year.

Prior Period Retirements / Reinstatements

If you back date a retirement, Oracle Assets automatically adjusts the depreciation for the year by the appropriate amount, resulting in a one-time adjustment in depreciation expense for the period. Oracle Assets then computes the gain or loss using the resulting net book value. You cannot backdate a retirement to a previous fiscal year, nor can you reinstate a retirement performed in a previous fiscal year.

Prior Period Amortized Adjustments

If you back date an amortized adjustment, Oracle Assets automatically calculates depreciation from the retroactive amortization start date, and adds the retroactive depreciation to the current period. You can perform multiple prior period amortized adjustments to an asset.

Credit Assets

You can enter a credit asset as an asset with a negative cost, and Oracle Assets credits depreciation expense and debits accumulated depreciation each period for the life of the asset.

Depreciation Projections

Oracle Assets estimates depreciation expense for the periods for which you project depreciation based on the financial information for your existing assets at the start of that period. The projection includes additions, transfers, and reclassification transactions you perform in the current period. It ignores other asset transactions you make in the current period, such as the depreciation adjustment for retroactive additions and retroactive transfers you enter in the current period. The program also ignores fully reserved and fully retired assets.

If you do not start your projection beyond the current period, the projection does not include your most recent transactions. For example, if the current period in your corporate book is JUL-92, and you request an annual projection starting with JAN-92, Oracle Assets projects depreciation expense based on the financial information for your existing assets as of the start of January 1992. The projection does not include some of the transactions you entered between January and June 1992. If instead you request an annual projection starting with JAN-93, Oracle Assets projects depreciation expense based on the financial information for your existing assets as of the start of July 1992.

Note: You cannot run depreciation projections for prior periods.

Related Topics

Defining Additional Depreciation Methods

Running Depreciation

Projecting Depreciation Expense

Asset Accounting

Depreciation Rules (Books)

Depreciation Calculation for Flat-Rate Methods

Depreciation Calculation for Table and Calculated Methods

Depreciation Calculation for the Units of Production Method

Depreciation Reports

Profile Options and Profile Options Categories Overview

Depreciation for Retirements

Depreciation for Reinstatements

Amortized and Expensed Adjustments

Depreciation Calculation for Flat-Rate Methods

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Use a flat-rate method to depreciate the asset over time using a fixed rate.

Oracle Assets uses a flat-rate and either the recoverable cost or the recoverable net book value as of the beginning of the fiscal year to calculate depreciation using a flat-rate depreciation method. The asset continues to depreciate until its recoverable cost and accumulated depreciation are the same.

Depreciation in the First Year of Life

An asset's prorate convention and depreciation method control when Oracle Assets starts to depreciate new assets. For assets using flat-rate methods, depreciation starts in the accounting period that either the date placed in service or the prorate date falls into, depending on the depreciate when placed in service flag. Oracle Assets allocates the first year's depreciation to the accounting periods remaining in the fiscal year.

Example

Suppose your fiscal year ends in May, you have a monthly (12 period) depreciation calendar, and you want to allocate depreciation evenly to each period in the year. You place a $10,000 asset in service in the third period of your fiscal year (AUG-92) using a half-year prorate convention. The rate for the diminishing value (calculation basis of NBV) depreciation method is 20%.

Since the asset is using a half-year prorate convention, the prorate date is in December--the mid-point of your fiscal year. For assets that have a prorate date at the mid-point of the fiscal year, depreciation expense for the first fiscal year of life is 50% of the amount for a full fiscal year. For the asset in our example, a full fiscal year depreciation amount is $2,000 (20% of $10,000), so the depreciation for the first year (fiscal 1993) is $1,000.

You can specify whether to start taking depreciation in the period of the date placed in service or the prorate date using the depreciate when placed in service flag for the prorate convention. If you elect to start depreciation in the accounting period corresponding to the date placed in service, Oracle Assets starts to depreciate the asset in AUG-92, and the depreciation for each period is $100 ($1000 divided by 10--the number of periods from August to May).

If you elect to start depreciation on the prorate date, Oracle Assets does not start to depreciate the asset until December. The depreciation for each period from DEC-92 to MAY-93 is $166.67 ($1,000 divided by 6--the number of periods from December to May).

Depreciation in the Remaining Years of Life

For methods using the net book value, you use the flat-rate and the recoverable net book value at the beginning of each fiscal year to calculate the annual depreciation. In the second year of the asset life (fiscal 1994), the net book value as of the beginning of the fiscal year is $9,000. Applying the 20% rate yields an annual depreciation amount of $1,800. Oracle Assets divides this amount evenly across all twelve accounting periods in the year, so depreciation expense for each period is $150.

Similarly, the net book value at the beginning of the 1995 fiscal year is $7,200. Oracle Assets calculates annual depreciation of $1,440 and divides this amount evenly to get the depreciation amount for each period. Oracle Assets repeats this process until the asset is fully depreciated or retired.

Calculation Basis

Flat-rate methods use a calculation basis of either the recoverable cost or recoverable net book value to calculate annual depreciation. Assets depreciating under flat-rate methods with a calculation basis of recoverable net book value do not become fully reserved. Rather, the annual depreciation expense becomes smaller and smaller over time.

Reset Recoverable Net Book Value

At the beginning of each fiscal year, Oracle Assets automatically resets each asset's year-to-date depreciation expense to zero and recalculates the recoverable net book value as of the beginning of the fiscal year. Oracle Assets also recalculates the recoverable net book value by which to multiply the flat-rate when you perform an amortized adjustment or revalue an asset.

Adjusting Rates

In some countries, the flat-rate consists of a basic rate and an adjusting rate, or loading factor. These rates vary according to your reporting authority's depreciation regulations.

When you add an asset, you can select a basic rate and an adjusting rate. Oracle Assets increases the basic rate by the adjusting rate to give you the adjusted rate. This is your flat-rate for the fiscal year.

Depreciation Rate = Basic Rate x (1 + Adjusting Rate) + Bonus Rate

Annual Depreciation Amount = Depreciation Rate x Depreciation Calculation Basis x Fraction of Year Held

The following table provides examples of how the rate is calculated.

Basic Flat-Rate Adjusting Rate Adjusted Rate
10% 10% 11%
10% 20% 12%
10% 25% 12.5%
10% 40% 14%

Bonus Depreciation

For reporting authorities that allow additional depreciation in the early fiscal years of an asset life, you can assign an additional bonus rate on top of the flat-rate. Oracle Assets adds the bonus rate to the adjusted rate to give you the flat-rate for the fiscal year. The following table provides examples of how the rate is calculated

Fiscal Year Adjusted Rate Bonus Rate Flat-Rate for Fiscal Year
1 20% 10% 30%
2 20% 7% 27%
3 20% 5% 25%

In this example, starting with year four, there is no bonus rate so the adjusted rate is the normal 20%. From fiscal year four until the asset is fully reserved, the flat-rate for each fiscal year is 20%.

Related Topics

Defining Additional Depreciation Methods

Specifying Dates for Prorate Conventions

Running Depreciation

Defining Bonus Depreciation Rules

Asset Accounting

About Prorate and Retirement Conventions

Depreciation Reports

Depreciation Calculation for Table and Calculated Methods

Use a life-based method to depreciate the asset over a fixed time using specified rates. There are two types of life-based methods:

Table: Oracle Assets gets the annual depreciation rate from a rate table.

Calculated: For straight-line depreciation, the depreciation program calculates the annual depreciation rate by dividing the life (in years) into one. Calculated methods spread the asset value evenly over the life.

You can accommodate new depreciation methods using rate tables instead of formulas. Add the appropriate rates to create a new method at any time.

Oracle Assets uses asset recoverable cost or net book value, salvage value, date placed in service, prorate convention, depreciation method, and life to calculate depreciation for life-based methods. Oracle Assets, using rates from a table or calculated rates, depreciates assets with life-based depreciation methods to be fully reserved at the end of a fixed lifetime.

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Determining the Depreciation Rate

The rate tables contain annual rates for each fiscal year of asset life. The annual rate varies according to your reporting authority's depreciation regulations.

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For example, some reporting authorities require that you prorate depreciation according to the number of months you hold an asset in its first fiscal year of life. In this case, your prorate calendar has 12 prorate periods and your rate table has 12 rates (one for each month of the year) per year of life. Other governments require that you prorate depreciation according to the number of days that you hold an asset in its first fiscal year of life. This means that there is a different depreciation rate for each day of the year. Thus, the number of rates in your rate table is a factor of 365. For example, the rate table would have 1825 rates for an asset with a 4 year life (365 x 5). This means that your prorate calendar must contain 365 prorate periods and correspondingly, your rate table must have 365 rates (one for each day of the year) for each year of life.

To determine the rates, calculate an annual depreciation rate for each fiscal year of an asset's life, for each period in your prorate calendar. This rate is the annual rate for the year for an asset where the prorate date falls into this prorate period. You do not need to calculate the depreciation rate for each depreciation period in each year of the asset life. You only enter annual depreciation rates in the Annual Rate field of the Rates window. The depreciation program uses this annual depreciation rate to determine the fraction of an asset cost or net book value to allocate to this fiscal year. It then uses the depreciation calendar and divide depreciation flag to spread the annual depreciation over the depreciation periods of the fiscal year.

Annual Depreciation Amount = Depreciation Rate x Depreciation Calculation Basis x Fraction of Year Held

Oracle Assets standard rate tables contain 12 rates per year of life. If your government requires daily rates, set up the appropriate rates using the Depreciation Methods window.

Depreciation in the first year of life

An asset prorate convention and depreciation method control when Oracle Assets starts to depreciate new assets. For assets using the straight-line method, depreciation starts in the first accounting period that the prorate date falls into. For assets using other life-based depreciation methods, depreciation starts in the first accounting period that either the date placed in service or the prorate date falls into, depending on whether Depreciate When Placed In Service is checked for the prorate convention. In both cases, Oracle Assets allocates the first year's depreciation to the depreciation periods remaining in the fiscal year.

Example

Suppose your fiscal year ends in May, you have monthly (12 period) depreciation and prorate calendars, and you want to allocate depreciation evenly to each period in the year. You place a $10,000 asset in service in the third period of your fiscal year (AUG-95) using the half-year prorate convention. Its life is 5 years and the depreciation method is 200% declining balance with a straight-line switch and a calculation basis rule of cost. Since the asset is using the half-year prorate convention, the prorate date is in December (the mid-point of your fiscal year) which corresponds to prorate period 7 in your prorate calendar shown in the following table:

Prorate Calendar

Period Number Period Name From Date To Date
1 JUN-95 01-JUN-95 30-JUN-95
2 JUL-95 01-JUL-95 31-JUL-95
3 AUG-95 01-AUG-95 31-AUG-95
4 SEP-95 01-SEP-95 30-SEP-95
5 OCT-95 01-OCT-95 31-OCT-95
6 NOV-95 01-NOV-95 30-NOV-95
7 DEC-95 01-DEC-95 31-DEC-95
8 JAN-96 01-JAN-96 31-JAN-96
9 FEB-96 01-FEB-96 28-FEB-96
10 MAR-96 01-MAR-96 31-MAR-96
11 APR-96 01-APR-96 30-APR-96
12 MAY-96 01-MAY-96 31-MAY-96

For assets that have a prorate period of 7, the rates listed in the following table show a 20% annual depreciation rate for the first year of life. If, however, you had used a prorate convention that resulted in a prorate period at the beginning of your fiscal year, Oracle Assets would have used the full rate for the year (40%).

Prorate Periods

Year 1 2 3 4 5 6 7 8 9 10 11 12
1 .40000 .36667 .33333 .30000 .26667 .23333 .20000 .16667 .13333 .10000 .06667 .03333
2 .24000 .25333 .26667 .28000 .29333 .30667 .32000 .33333 .34667 .36000 .37333 .32667
3 .14400 .15200 .16000 .16200 .17600 .18400 .19200 .20000 .20800 .21600 .22400 .23200
4 .10200 .10944 .11077 .11200 .11314 .11421 .11520 .12000 .12480 .12960 .13440 .13920
5 .10200 .10944 .11077 .11200 .11315 .11420 .11520 .11362 .11232 .11109 .10996 .10894
6 .00000 .00912 .01846 .02800 .03771 .04759 .05760 .06632 .07488 .08331 .09164 .09986
Total 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000

For the asset in this example, Oracle Assets uses a rate of 20%, so the depreciation for fiscal 1996 is $2,000 (20% of $10,000).

You can specify whether to start taking depreciation in the period of the date placed in service or the prorate date using the Depreciate When Placed In Service flag for the prorate convention. If you elect to start depreciation in the period corresponding to the date placed in service, Oracle Assets starts to depreciate the asset in AUG-95, and the depreciation for each period is $200 ($2,000 divided by 10--the number of periods from August to May).

If you elect to start depreciation in the period corresponding to the prorate date, Oracle Assets does not start to depreciate the asset until DEC-95, and the depreciation for each period from DEC-95 to MAY-96 is $333.33 ($2,000 divided by 6--the number of periods from December to May).

Depreciation In The Middle Years Of Life

For the rest of the asset life, you use annual depreciation rates that correspond to the asset's prorate period in the rate table. Thus, in the second fiscal year of the asset's life (fiscal 1996), Oracle Assets uses a 32% annual depreciation rate (prorate period 7, year 2.). This yields a depreciation amount of $3,200. Oracle Assets divides this amount evenly across all the accounting periods in the year, so depreciation expense for each period is $266.67.

Similarly, the rates for 1995, 1996, and 1997 are 19.20%, 11.52%, and 11.52% respectively. Oracle Assets calculates annual depreciation for these years as $1,920, $1,152, and $1,152 and divides these amounts evenly across all the accounting periods in the appropriate fiscal years.

Depreciation In The Last Year Of Life

In the asset's final year of life (fiscal 1998), the rate is 5.76%, so the final year's depreciation is $576. This amount is divided evenly across the number of periods remaining in the asset's life (in this case 6), to yield a depreciation amount of $96 per period.

Related Topics

Defining Additional Depreciation Methods

Running Depreciation

Asset Accounting

Depreciation Reports

Depreciation Calculations for Double Declining Table Base Methods

Below describes how regular depreciation, depreciation after revaluation, and revaluation reserve amortization are calculated for the following table based methods: 200DB, 150DB, and other method.

Depreciation Calculation for the Units of Production Method

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Units of production methods depreciate the asset cost based on actual use or production each period.

Units of production depreciation differs from other methods because it bases depreciation only on how much you use the asset. While methods such as straight-line divide depreciation over the asset life regardless of use, units of production disregards the passage of time.

Units of production depreciation is used for assets for which it is better to measure the lifein terms of the quantity of the resource you expect to extract from them, such as mines or wells. For example, the production capacity of an oil well is the number of barrels of oil you expect to extract from it. For machinery or equipment, you measure the production capacity in terms of the expected total hours of use.

You can enter the production capacity as the expected total production or expected total use. First, you enter the units of production depreciation method, production capacity, and unit of measure. You then enter the production each period to depreciate the asset according to actual use that period.

Basic Depreciation Calculation

For a units of production depreciation method, Oracle Assets uses asset cost, cost ceiling, salvage value, capacity, and production entered for the period to calculate depreciation. It depreciates assets according to the actual production you enter. Oracle Assets calculates the period depreciation rate by dividing the production for the period by the capacity. The depreciation for the period is the depreciation rate multiplied by the recoverable cost.

Depreciation Expense = (Production for the Period / Capacity) X Recoverable Cost

Oracle Assets then allocates the period depreciation to the depreciation expense accounts to which you have assigned the asset. Notice that for units of production depreciation there is no annual depreciation amount.

Depreciation Based on Actual Production

The units of production method does not use depreciation expense ceilings. Also, since depreciation for these assets is calculated on actual production, if you resume depreciation for an asset, reinstate the asset, or perform a prior period transaction, there is no missed depreciation.

Related Topics

Assets Depreciating Under Units of Production

Units of Production Interface

Entering Production Amounts

Depreciation Reports

Assets Depreciating Under Units of Production

You can use the units of production method to allocate the cost of an asset by the quantity of resource extracted or used each period. You can automatically or manually enter production amounts for the asset, and project future production amounts if necessary. There are some restrictions when using the units of production depreciation method. For example, since Oracle Assets only stores production amounts for an asset in the corporate book, there are some restrictions on changing depreciation information in corporate or tax books.

Production Interface

You can load production automatically each period using the production interface. You also can enter or update production manually in the Periodic Production window.

Production Amount

The start date and end date you enter to which production amounts apply must fall within a single depreciation period in Oracle Assets.

You cannot enter production for dates before the asset's prorate date in the corporate book or for a period for which you have already run depreciation.

You cannot enter production for periods prior to the current open period in your corporate book.

You also cannot enter production for date ranges which overlap. For example, if you enter production for 01-JUN-1995 through 15-JUN-1995, you cannot enter production for 15-JUN-1995 through 30-JUN-1995. You can enter production for 16-JUN-1995 through 30-JUN-1995.

Projected Production Information

You can enter production for dates in the future to calculate depreciation projections for future periods. You can update the projected amounts when you know the actual production for the period and want to actually depreciate the asset.

Retirements

If you have entered production information for future periods to project depreciation expense, you may have to remove this projected production information before you retire a units of production asset. Oracle Assets uses all of the production amounts you entered for dates before the retirement prorate date to calculate depreciation expense. If your retirement prorate date is after the retirement date, you may have to remove projected production to avoid using it to calculate actual depreciation expense.

When you partially retire a units of production asset, you must manually adjust the capacity in the Books window. Adjust the capacity to reflect the decrease only for production not already taken, since you already entered the actual production amounts.

Prior Period Transactions

If you enter a retroactive addition or reinstatement, you must enter the missed production information so Oracle Assets can calculate depreciation. If you enter a retroactive retirement, Oracle Assets reverses the depreciation taken since the date of the retirement.

Category Defaults

You can specify a production capacity and unit of measure that you usually use for assets in a category. When you enter an asset in this category, Oracle Assets defaults the capacity and unit of measure. You can override the default values for an individual asset if necessary.

Restrictions

You cannot enter production for a construction-in-process (CIP) asset before you capitalize it. Similarly, you cannot enter production for a an asset before its prorate date. If you use a prorate convention such as actual months, you can enter production for the period you added the asset.

You cannot enter or upload units of production assets with accumulated depreciation. Instead, add the asset with zero accumulated depreciation, and then provide the life-to-date production amount for the current period in the periodic production table using the Periodic Production window. Oracle Assets uses the production amount you enter to calculate the catchup depreciation.

Changing the Depreciation Method

You can change the method from calculated, table, or flat-rate to production only in the period you add the asset.

Since Oracle Assets only stores production amounts for an asset in the corporate book, there are some restrictions on changing depreciation information in corporate or tax books.

An asset can have a production method in the tax book only if it has a production method in the corporate book. You can change the depreciation method from production to calculated, table, or flat-rate type in the corporate book only if the asset does not use a production method in any associated tax book. An asset can have any kind of method in the tax book and a production method in the corporate book.

Note: Depreciation will fail with an adjusted_capacity error when a period's production is entered that would result in ltd_production becoming greater than the asset's production capacity.

Changing the Capacity

The capacity must be the same in all books in which the asset uses a production method. You can change the capacity for the asset in the corporate book only. Use Mass Copy to copy the capacity adjustment to each tax book.

Mass Copy

Use Mass Copy to copy adjustments to your tax books. If you use a units of production method in a tax book, you must Mass Copy from the associated corporate book each period to ensure that the capacity is up-to-date.

Mass Copy always copies capacity adjustments for your units of production assets, regardless of the Mass Copy rules you specified for the book. If you do not allow amortized adjustments in your tax book, Mass Copy copies an amortized capacity adjustment as an expensed adjustment.

Related Topics

Depreciation Calculation for the Units of Production Method

Using the Production Interface

Production History Report

About Prorate and Retirement Conventions

Specifying Dates for Prorate Conventions

Entering Production Amounts

Defining Depreciation Books

Using the Production Interface

You can enter production information manually, or you can maintain your production information in another system and upload the information using the production interface. Prepare and analyze your production information on any feeder system and then automatically transfer your production information into Oracle Assets. Oracle Assets uses that information to calculate depreciation for your units of production assets.

To import production information to Oracle Assets:

  1. Use an import program or utility to export data from your feeder system and populate the FA_PRODUCTION_INTERFACE table.

  2. Run the Upload Production program to move your production information into Oracle Assets.

  3. Run the Production History report to review the status of all imported items.

  4. Use the Periodic Production window to review or change your production information.

Related Topics

Assigning Values to Required Columns in the FA_PRODUCTION_INTERFACE Table

Customize the Production Interface SQL*Loader Script

Uploading Production into Oracle Assets

Entering Production Amounts

Assigning Values to Required Columns in the FA_PRODUCTION_INTERFACE Table

FA_PRODUCTION_INTERFACE, the production interface table, is organized into columns in which Oracle Assets stores production information. Enter values for the following required columns:

ASSET_NUMBER: Alphanumeric column. The asset number of the units of production asset for which you want to enter production.

PRODUCTION: Numeric column. The production amount for the asset between Start_Date and End_Date.

START_DATE: Date column. The first date to which this production amount applies.

END_DATE: Date column. The last date to which this production applies

Related Topics

Customize the Production Interface SQL*Loader Script

Uploading Production into Oracle Assets

Entering Production Amounts

Customize the Production Interface SQL*Loader Script

Listed below are a sample SQL*Loader script (filename: production_information.ctl) and production information data file (filename: production_information.dat) that Oracle Assets uses for units of production depreciation. You can easily modify this script to load your production information into the production interface.

Sample SQL*Loader script

LOAD DATA
INFILE production_information.dat
INTO TABLE FA_PRODUCTION_INTERFACE
FIELDS TERMINATED BY WHITESPACE

(ASSET_NUMBER,
PRODUCTION,
START_DATE DATE "DD-MON-YYYY",
END_DATE DATE "DD-MON-YYYY")

Sample Production Information Data file

321456 10000 01-JUL-1995 31-JUL-1995
322345 1100 01-AUG-1995 05-AUG-1995
322534 1200 16-AUG-1995 26-AUG-1995
323242 1300 24-AUG-1995 31-AUG-1995
334261 1400 01-SEP-1995 30-SEP-1995
433251 1500 01-OCT-1995 13-NOV-1995

Production Information

For each asset and date range for which you want to enter a production amount, you must specify the following information in the SQL*Loader script:

Remember that you must enter the asset number exactly as it appears in Oracle Assets. For example, do not to enter the asset number 'uopasset1' in the script file when your asset number is actually 'UOPASSET1'.

Running SQL*Loader

To execute the SQL*Loader script and load your production data into the production interface, type the following at the system prompt:

 $ sqlload  <account_name/password> 
   control = production_information.ctl

Related Topics

Assigning Values to Required Columns in the FA_PRODUCTION_INTERFACE Table

Uploading Production into Oracle Assets

Entering Production Amounts

Uploading Production into Oracle Assets

Prerequisites

To upload production to Oracle Assets:

  1. Choose Production:Upload from the Navigator window.

  2. Enter the corporate depreciation Book for which you want to upload production information in the Parameters window.

    If you have not yet run depreciation for a period, you can update or reload production amounts for the same date ranges. Oracle Assets overwrites the production amounts with the new production if you reload.

  3. Choose Submit to upload the production.

  4. Review and update uploaded production amounts in the Enter Production window. See: Entering Production Amounts.

Related Topics

Assigning Values to Required Columns in the FA_PRODUCTION_INTERFACE Table

Customize the Production Interface SQL*Loader Script

Entering Production Amounts

Submitting a Request, Oracle Applications User's Guide

Entering Production Amounts

You can enter or update production amounts for assets depreciating under units of production. You can enter production information online, or you can load it automatically from a feeder system using the Upload Periodic Production program. Enter production more than once a period if necessary.

To enter production amounts:

  1. Open the Periodic Production window.

  2. Find assets within a corporate Book for which you want to enter production information.

  3. Enter the from and to date and the total Production for an asset.

    Optionally enter production for multiple non-overlapping date ranges within a single period.

  4. Save your work.

To update production amounts

Related Topics

Using the Production Interface

Uploading Production into Oracle Assets

Depreciation Calculation for the Units of Production Method

Assets Depreciating Under Units of Production

Production History Report

Depreciation Reports

Projecting Depreciation Expense

Depreciation projections are estimates of actual depreciation expense. You can project depreciation expense for any depreciation book.

You can run depreciation projection only for the current depreciation parameters set up in your system. If you need to project depreciation for scenarios other than your current setup, you can run what-if depreciation using parameters that are not yet set up in your system. See: Forecasting Depreciation.

Note: You cannot run depreciation projections for group or member assets, or any asset using the unit of production depreciation method in budget books.

Prerequisites

To project depreciation expense:

  1. Navigate to the Depreciation Projections window.

  2. Enter the Projection Calendar to specify how you want to summarize the projection.

    You can summarize the results by year, quarter, month, or any other interval. For example, you can choose a monthly or quarterly calendar.

  3. Enter the Number of Periods for which you want to project depreciation. You can project depreciation expense for the current open period or any number of future periods, on up to four depreciation books at once.

    Note: You cannot run depreciation projections for prior periods.

  4. Enter the Starting Period for your projection.

  5. Check Cost Center Detail to print a separate depreciation projection amount for each cost center. Otherwise, Oracle Assets prints a consolidated projection report for each expense account without cost center detail.

  6. Check Asset Detail to print a separate depreciation amount for each asset. Otherwise, Oracle Assets prints a consolidated projection report without asset detail.

  7. Enter the Book(s) that you want to include in your projection. You can enter a maximum of four books, and all of them must use the same Account structure. The fiscal year name for the Calendar and each Book must be the same.

  8. Save your work.

    Oracle Assets submits a concurrent process to calculate the projection, and automatically runs the Depreciation Projection Report.

Related Topics

Depreciation Projections (Depreciation Calculation)

Depreciation Projection Report

Forecasting Depreciation

You can use what-if depreciation analysis to forecast depreciation for groups of assets in different scenarios without making changes to your Oracle Assets data. You can run what-if depreciation analysis on assets defined in your Oracle Assets or on hypothetical assets that are not defined in Oracle Assets.

Important: You may use What-if Analysis to project depreciation for a group asset. However, you may not create a hypothetical group asset. Note that Prorate Convention has no relevance to group or member assets.

What-if depreciation analysis differs from depreciation projections in that what-if depreciation analysis allows you to forecast depreciation for many different scenarios without changing your Oracle Assets data. Depreciation projection allows projection only for the parameters set up in Oracle Assets. See: Projecting Depreciation Expense.

To perform what-if depreciation analysis in Oracle Assets, you enter different combinations of parameters for a set of assets in the What-If Depreciation Analysis window. When you run what-if analysis based on the parameters you entered, Oracle Assets automatically launches a report, from which you can review the results of the analysis. You can run what-if analysis for as many scenarios as you like. Each time you run what-if analysis, Oracle Assets launches a separate report.

If you are satisfied with the results of your analysis, you can enter the new parameters in the Mass Changes window to update your assets according to the parameters you specified in the what-if analysis.

You may want to run what-if depreciation analysis for several different scenarios for comparison purposes. You can run what-if depreciation analysis for any number of scenarios. The results of an analysis will not overwrite the results of previous analyses.

Note: What-if Depreciation cannot be run for assets with the Units of Production method.

To forecast depreciation using what-if depreciation analysis:

  1. Navigate to the What-If Depreciation Analysis window in Oracle Assets.

  2. The value in the Currency field defaults to the book's currency. If you are using MRC, the Currency field defaults to the primary currency. If you want to run What-if Analysis for the reporting currency, change the value in the Currency field to the reporting currency.

  3. Enter the starting period for which you want to run What-if Analysis.

  4. Enter the number of periods for which you want to run What-if Analysis.

    Note: You cannot run What-if Analysis for hypothetical assets in the reporting currency.

  5. Enter the book containing the assets for which you want to run what-if analysis.

  6. In the Assets to Analyze tabbed region, enter the parameters you want to use to identify the set of assets for which you want to run what-if depreciation analysis.

    OR

    In the Hypothetical Assets tabbed region, enter the parameters to identify the hypothetical asset for which you want to run what-if depreciation analysis.

    See: Parameters.

  7. Enter the Depreciation Scenario parameters to identify the depreciation rules to be used in the analysis.

    See: Depreciation Scenario Parameters.

  8. Choose Run to run what-if depreciation analysis.

  9. Review the results of the What-If Depreciation Report or the Hypothetical What-If Report by navigating to the View My Requests window.

  10. Update your assets according to the specified parameters in the Mass Changes window.

    OR

    Repeat this procedure using different parameters.

To forecast depreciation using the Request Center:

  1. From the Request Center, navigate to the Report Submission and Publishing window.

  2. Choose Standard (Variable Format).

  3. In the Report field, choose What-If Depreciation Analysis from the list f values and choose the Submission button.

  4. Enter the book containing the assets for which you want to run what-if analysis.

  5. Enter the begin period and the number of periods.

  6. Enter the Assets to Analyze parameters to identify the set of assets for which you want to run what-if depreciation analysis.

    See: Assets to Analyze Parameters.

  7. Enter the Depreciation Scenario parameters to identify the depreciation rules to be used in the analysis.

    See: Depreciation Scenario Parameters.

  8. Submit the What-If Depreciation Analysis report from the Request Center.

  9. Review the results of the What-If Depreciation Analysis Report.

  10. Update your assets according to the specified parameters in the Mass Changes window

    OR

    Repeat this procedure using different parameters.

Parameters

You run what-if depreciation analysis based on parameters you specify in the What-If Depreciation Analysis window in Oracle Assets. You enter these parameters for purposes of analysis only. The parameters you enter in these windows do not affect depreciation of your Oracle Assets data.

Assets to Analyze Parameters

Use the Assets to Analyze tabbed region when you want to perform what-if depreciation analysis on assets that exist in your Oracle Assets system. You use this group of parameters to tell Oracle Assets on which assets to perform what-if analysis. If you leave the optional fields blank, Oracle Assets defaults to performing analysis on all possible assets. The following table provides explanations of the parameters:

Parameter Usage Explanation
Asset Number Optional You can enter a beginning range, and ending range, or both. If both fields are blank, Oracle Assets performs analysis on all assets in the specified book. If only the beginning asset number is specified, Oracle Assets performs analysis on all assets including and following the beginning asset number. Similarly, if only the ending asset number is specified, Oracle Assets performs analysis on all assets up to and including the ending asset number.
Dates in Service Optional You can enter a beginning range, and ending range, or both. Similar to the Asset Number field, if you leave both fields blank, Oracle Assets will perform analysis on all assets in the specified book, or on all assets preceding or following the beginning or ending date.
Description Optional If you only want assets of a particular description included in your analysis, enter the description.
Category Optional If you only want assets of a particular category included in your analysis, enter the category.
Analyze Fully Reserved Assets Optional Check the Analyze Fully Reserved Assets check box to include fully reserved assets in your analysis.

Hypothetical Assets Parameters

Use the Hypothetical Assets tabbed region when you want to perform what-if depreciation analysis on assets that have not been defined in your Oracle Assets system. The following table provides explanations of the parameters:

Parameter Usage Explanation
Category Required Enter the category of the hypothetical asset.
Date in Service Required Enter a hypothetical date placed in service.
Cost Required Enter a hypothetical asset cost.
Accumulated Depreciation Optional Enter hypothetical accumulated depreciation.

Depreciation Scenario Parameters

Use this group of parameters to indicate the depreciation rules you want applied in the analysis. If you leave any of the fields blank, Oracle Assets applies the rules already set up in Oracle Assets. You can enter any combination of parameters. No specific parameters are required, but you must enter at least one parameter. The following table provides explanations of the parameters:

Parameter Explanation
Method Enter the depreciation method, for example, flat-rate. This field is not required, however, if you do enter a depreciation method in this field, it affects other fields you can enter, depending on the value you entered in the Method field. If you enter a life-based method, the Life field appears where you can enter the life of the asset. If you enter a rate-based method, the Rate field appears where you can enter the rate.
Life Enter the life of the asset in years and months. If you entered a value in the Method field, it must be a life-based method for the Life field to be valid.
Rate Enter the depreciation rate. If you entered a value in the Method field, it must be a rate-based method for the Rate field to be valid.
Prorate Convention Enter the prorate convention you want applied to the assets in the what-if analysis.
Salvage Value % Enter the percentage of the cost of your assets that should be equivalent to the salvage value, based on the following formula:
Salvage Value=Cost x Default Percentage
Amortize Adjustments Check the Amortize Adjustments check box if you want your adjustments to be amortized in your analysis. If you do not check the check box, adjustments will be expensed on the analysis.
Bonus Rule If you will be using bonus rules, add the bonus rule used to depreciate the asset.

Process

After you have entered the parameters you want used in your analysis, select the Run button to launch the What-if Depreciation Report or the Hypothetical What-If Report.

For every asset you specified, Oracle Assets will compute depreciation data for the number of periods you specified.

Related Topics

What-If Depreciation Report

Hypothetical What-If Report

Request Center (Oracle Applications Desktop Integrator User Guide)

Data Archive and Purge

Archive and purge transaction and depreciation data for the book and fiscal year you specify to release disk space for current data.

If you do not need to run reports for previous fiscal years, you can copy the data onto tape or any storage device, and then delete it from your system. If you later need these records online, you can reload them into Oracle Assets.

What the Purge Program Removes

The purge program removes the depreciation expense and adjustment transaction records for the book and year you specify. However, it does not remove the asset identification, financial, and assignment information for your assets, including assets you retired or that became fully reserved during that fiscal year.

Maintain Audit Trail of Purge Transactions

Oracle Assets maintains an audit trail of which fiscal years you have archived, purged, and restored, and how many records were processed. If your system fails during a purge, you can safely resubmit it. Oracle Assets only processes those records which it has not yet processed.

Purge Fiscal Years in Chronological Order

You must purge fiscal years in chronological order. Before you purge a fiscal year, you must archive and purge all earlier fiscal years. You cannot purge periods in the current fiscal year. If your current period is the first period of a new fiscal year, you cannot purge the previous period. You can only restore the most recently purged fiscal year, so you must restore fiscal years in reverse chronological order. You cannot archive and purge the period prior to the current period.

Purge Security

You must allow purge for the depreciation book you want to purge in the Book Controls window. To prevent accidental purge, leave Allow Purge unchecked for your books, and check it only just before you perform a purge.

You submit archive, purge, and restore in the Archive and Purge window. Oracle Assets provides this window only under the standard Fixed Assets Administrator responsibility. You should limit access to this responsibility to only users who require it.

Note: A Corporate book will only appear in the List of Values of Purge window if related Tax Books are also enabled for purge. You should purge Corporate Books and related Tax Books at the same time, as distributions are shared.

Related Topics

Archiving and Purging Transaction and Depreciation Data

Defining Depreciation Books

Resizing the Archive Tables

Archive, Purge, and Restore Process

Resizing the Archive Tables

If you are archiving a large number of records for a fiscal year, you can update the FA:Archive Table Sizing Factor to specify the size of the temporary tables created by an archive. Specifically, if the number of rows Oracle Assets will archive multiplied by the average rowsize of that table for all three tables is very different from 100,000 bytes, you may want to adjust the FA: Archive Table Sizing Factor.

Contact your Database Administrator to find out if you need to update this factor. You can tell your Database Administrator that the Sizing Factor specifies how many kilobytes of storage to reserve for the initial extent. The default value is 100.

You can determine approximately how many rows Oracle Assets will archive for a fiscal year using the following SQL script. You can expect to have about six FA_ADJUSTMENTS rows per transaction performed that year, and one FA_DEPRN_DETAIL row and one FA_DEPRN_SUMMARY row for each asset for each period in each book.

To find out about how many FA_ADJUSTMENTS rows Oracle Assets will archive:

 select count(ADJ.ASSET_ID) 
     from FA_ADJUSTMENTS ADJ,
          FA_DEPRN_PERIODS DP,
          FA_FISCAL_YEAR FY
where 
     FY.FISCAL_YEAR = Fiscal Year To Archive and  DP.CALENDAR_PERIOD_OPEN_DATE >= FY.START_DATE and
     DP.CALENDAR_PERIOD_CLOSE_DATE <= FY.END_DATE and
     ADJ.PERIOD_COUNTER_CREATED = DP.PERIOD_COUNTER;

To find out about how many FA_DEPRN_DETAIL rows Oracle Assets will archive:

select count(DD.ASSET_ID)
     from FA_DEPRN_DETAIL DD,
          FA_DEPRN_PERIODS DP,
          FA_FISCAL_YEAR FY
where
     FY.FISCAL_YEAR = Fiscal Year To Archive and
     DP.CALENDAR_PERIOD_OPEN_DATE >= FY.START_DATE and
     DP.CALENDAR_PERIOD_CLOSE_DATE <= FY.END_DATE and
     DD.PERIOD_COUNTER = DP.PERIOD_COUNTER;

To find out about how many FA_DEPRN_SUMMARY rows Oracle Assets will archive:

select count(DS.ASSET_ID)
                from FA_DEPRN_SUMMARY DS,
                                 FA_DEPRN_PERIODS DP,
                                 FA_FISCAL_YEAR FY
where
                          FY.FISCAL_YEAR = Fiscal Year To Archive and
       DP.CALENDAR_PERIOD_OPEN_DATE >= FY.START_DATE and
       DP.CALENDAR_PERIOD_CLOSE_DATE <= FY.END_DATE and
       DD.PERIOD_COUNTER = DP.PERIOD_COUNTER;

You can determine the average rowsize for each table using something like the following SQL script. You can expect each row to be about 50 bytes.

select avg(nvl(vsize(column_1),0)) +
          avg(nvl(vsize(column_2),0)) +
                  . . .
          avg(nvl(vsize(column_N),0))
     from table_name;

Related Topics

Archiving and Purging Transaction and Depreciation Data

User Profiles in Oracle Assets

Archive, Purge, and Restore Process

Archive, Purge, and Restore Process

There are several steps to archive, purge, and restore a fiscal year. Some of these steps you can do using the Mass Purge window. Others you should ask your Database Administrator to perform. To archive and purge a fiscal year, you need to:

  1. Archive and purge all earlier fiscal years.

  2. Update FA: Archive Table Sizing Factor if necessary (Database Administrator).

  3. Run Archive (Fixed Assets Administrator).

  4. Export temporary archive tables to storage device (Database Administrator).

  5. Run Purge (Fixed Assets Administrator).

  6. Drop temporary archive tables (Database Administrator).

  7. Export current data from tables from which you purged (Database Administrator).

  8. Drop tables from which you purged (Database Administrator).

  9. Recreate tables from which you purged (Database Administrator).

  10. Import current data into tables from which you purged (Database Administrator).

  11. Verify tables and indexes (Database Administrator).

    If you later need the data online, you can restore it. To restore a fiscal year you need to:

  12. Restore all later fiscal years.

  13. Import temporary archive tables from storage device (Database Administrator).

  14. Run Restore (Fixed Assets Administrator).

Archiving Data

When you perform the archive, Oracle Assets assigns a reference number to it and copies the depreciation expense and adjustment transaction records to three temporary tables:

You can export the temporary archive tables onto tape or any storage device. If you need these records again, you can restore them. You must archive records before you can purge them, and Oracle Assets prevents you from running purge if these tables do not exist. You should not drop the tables until after you have exported the tables and run purge.

Purging Data

Oracle Assets prevents you from running purge if the temporary archive tables from the archive transaction do not exist. Since the archive number is part of the temporary table name, Oracle Assets purges only the records that were archived during the archive you specify.

Recreate Database Objects From Which You Purge

After you purge your database, contact your Database Administrator to export, drop, and recreate the tables from which you purged data. By recreating these objects, you can reduce the memory each object occupies in your tablespace and perhaps increase the performance of your system.

You can tell your Database Administrator that you purged from the FA_DEPRN_SUMMARY, FA_DEPRN_DETAIL, and FA_ADJUSTMENTS tables. After recreating the tables and importing the data, check that all the appropriate indexes were recreated. The Oracle Assets Technical Reference Manual provides information on which indexes each database table requires.

Restoring Data

To restore records that you have purged from Oracle Assets, you must first import the tables from your archive, then perform the restore. You do not need to archive the records before you purge them again.

Since the archive number is part of the temporary table name, Oracle Assets restores only the records that were archived during that archive you specify.

Controlling Your Archive

Use the Status field to determine the next possible action.

Status Definition Possible Action
New Newly created archive definition Archive
Archived Archive completed successfully Purge
Purged Purge completed successfully Restore
Restored Restoration completed successfully Purge

Related Topics

Archiving and Purging Transaction and Depreciation Data

Resizing the Archive Tables

Archiving and Purging Transaction and Depreciation Data

If you no longer need to run reports for previous fiscal years, you can archive and purge historical data to free hardware resources. You can only restore the most recently purged fiscal year, so you must restore fiscal years in reverse chronological order.

Prerequisites

To archive and purge transaction and depreciation data:

  1. Change Responsibilities to Fixed Assets Administrator.

  2. Open the Archive and Purge window.

  3. Enter the Book and Fiscal Year you want to archive. You must archive and purge in chronological order.

  4. Choose Archive to submit a concurrent request that changes the status from New to Archived and creates temporary archive tables with the data to be purged.

    Oracle Assets automatically assigns an Archive Number when you save your work.

    Note: The temporary table name includes a five-digit archive number.

  5. Export the archive tables to a storage device.

  6. Return to the Archive and Purge window and use the Archive Number to find the archive you want to purge.

  7. Choose Purge to submit a concurrent request that changes the status from Archived to Purged and removes the archived data from Oracle Assets tables. Now your database administrator can drop the temporary archive tables.

    You can only purge definitions with a status of Archived or Restored.

To restore archived data to Oracle Assets:

  1. Import the archive tables from your storage device.

  2. Open the Archive and Purge window under the standard Fixed Assets Administrator responsibility.

  3. Use the Archive Number to query the archive you want to restore.

  4. Choose Restore to submit a concurrent process that changes the status from Purged to Restored and inserts the previously purged data into Oracle Assets tables.

    You can purge the restored data again if necessary.

Related Topics

Data Archive and Purge

Unplanned Depreciation

Unplanned depreciation is a feature used primarily to comply with special depreciation accounting rules in Germany and the Netherlands. However, you also can use this feature to handle unusual accounting situations in which you need to adjust the net book value and accumulated depreciation amounts for an asset without affecting its cost.

For more specific information about using the unplanned depreciation feature to satisfy statutory requirements in Germany, see: Unplanned Depreciation Report.

You can enter unplanned depreciation amounts by asset and book for any current period during the useful life of an asset. You can enter unplanned depreciation for an asset in both the corporate and/or tax books. When you enter unplanned depreciation, Oracle Assets immediately updates the year-to-date and life-to-date depreciation, and the net book value of the asset. You can change the depreciation method after entering unplanned depreciation.

The unplanned depreciation expense you enter must not exceed the current net book value (cost - salvage value - accumulated depreciation) of the asset. If necessary, you can enter multiple unplanned depreciation amounts, both positive and negative, in a single period, provided that the net amount does not exceed the current net book value of the asset. Thus, it is possible to enter unplanned amounts that back out depreciation taken in prior periods, including previously entered unplanned depreciation amounts.

When you enter unplanned depreciation expense, you can choose in which period to begin amortization of the asset's remaining net book value. You can begin amortization in the current or a subsequent period, or you can choose not to amortize the remaining net book value. Note that if you do not amortize the unplanned depreciation or make an amortized adjustment in a subsequent period, the asset will be fully reserved before the end of the useful life. If you choose to amortize in a subsequent period, simply enter an unplanned depreciation amount of zero, and check the Amortize from Current Period check box. Oracle Assets will begin to amortize the remaining net book value as of that period.

Oracle Assets uses the unplanned depreciation amount, in addition to regular depreciation, to calculate depreciation for the period in which you entered the unplanned depreciation. When you create journal entries for the general ledger, Oracle Assets posts the expense due to unplanned depreciation to the account you selected when you entered the unplanned depreciation for the asset.

Enable Function Security

You can enable or disable unplanned depreciation entry by responsibility if you want to allow or restrict user access to this function. See: Function Security in Oracle Assets.

View Unplanned Depreciation Amounts

You can use the Financial Information inquiry windows to view the effects of the unplanned depreciation amounts you enter. Oracle Assets includes unplanned depreciation amounts in the current and prior period accumulated depreciation, year-to-date depreciation, and net book value amounts of the asset. The View Depreciation History window includes unplanned depreciation amounts in the depreciation expense per period for each asset and book. Note that unplanned depreciation amounts appear as ADJUSTMENT transactions.

Note: Unplanned depreciation in the period the asset is added is not tracked as an adjustment transaction in the system. The effect is reflected in the net book value and accumulated depreciation amounts for the asset.

If you want to view unplanned depreciation amounts separately, use the Transaction Detail window. In this window, you can view the unplanned depreciation type and the unplanned depreciation expense account for each unplanned amount.

Restrictions

You cannot enter unplanned depreciation for assets shared between balancing segments. In other words, you cannot allocate unplanned depreciation amounts to specific distributions of an asset. Oracle Assets posts the unplanned depreciation expense only to the depreciation expense account you enter in the Unplanned Depreciation window.

You cannot enter unplanned depreciation for assets depreciating under table-based methods. If you need to enter unplanned depreciation for an asset depreciating under a table-based method, you must first change the depreciation method to a method that is not table-based.

You cannot enter unplanned depreciation to a unit of production asset that was placed in service in the current period. You can only add unplanned depreciation to a unit of production asset that has historical reserves.

You cannot make expensed adjustments to assets for which you have previously entered unplanned depreciation and have since amortized the amount. You may, however, perform expensed adjustments to the asset until you choose to amortize the unplanned depreciation amount. In addition, you cannot perform a mass change for assets that have unplanned depreciation.

You need to run Depreciation again to process an asset after entering Unplanned Depreciation (if the asset was processed by Depreciation and the period is not yet closed).

Examples

Example 1: Unplanned Depreciation

You place an asset in service with a life of five years, and a cost of 120,000 DEM. The depreciation method is straight-line. There is no salvage value. The calendar has four periods per year. The following table shows quarterly depreciation amounts for the first seven quarters:

Year of Life Net Book Value (Start of period) Depreciation Expense Unplanned Depreciation Accumulated Depreciation
Yr 1, Q1 120,000 6,000 0 6,000
Yr 1, Q2 114,000 6,000 0 12,000
Yr 1, Q3 108,000 6,000 0 18,000
Yr 1, Q4 102,000 6,000 0 24,000
Yr 2, Q1 96,000 6,000 0 30,000
Yr 2, Q2 90,000 6,000 0 36,000
Yr 2, Q3 84,000 6,000 0 42,000

In Year 2, Quarter 4 you enter an unplanned depreciation amount of 10,000 DEM. You choose NOT to amortize the unplanned amount this period. Oracle Assets continues depreciating the asset taking the regular depreciation expense in subsequent periods until you choose to amortize the unplanned depreciation or make an amortized adjustment.

If you do not amortize the unplanned depreciation or make an amortized adjustment in a subsequent period, the asset will be fully reserved before the end of the useful life. The following table shows quarterly depreciation amounts for the last twelve quarters:

Year of Life Net Book Value (Start of period) Depreciation Expense Unplanned Depreciation Accumulated Depreciation
Yr 2, Q4 78,000 6,000 10,000 58,000
Yr 3, Q1 62,000 6,000 0 64,000
Yr 3, Q2 56,000 6,000 0 70,000
Yr 3, Q3 50,000 6,000 0 76,000
Yr 3, Q4 44,000 6,000 0 82,000
Yr 4, Q1 38,000 6,000 0 88,000
Yr 4, Q2 32,000 6,000 0 94,000
Yr 4, Q3 26,000 6,000 0 100,000
Yr 4, Q4 20,000 6,000 0 106,000
Yr 5, Q1 14,000 6,000 0 112,000
Yr 5, Q2 8,000 6,000 0 118,000
Yr 5, Q3 2,000 6,000 0 120,000

Example 2: Unplanned Depreciation Amortized from Following Period

You place an asset in service with a life of five years, and a cost of 120,000 DEM. The depreciation method is straight-line. There is no salvage value. The calendar has four periods per year.

You enter an unplanned depreciation of 10,000 DEM in Year 2, Quarter 4, but you choose to amortize the unplanned depreciation expense over the remaining life of the asset, starting in the period following the unplanned depreciation. The following table shows quarterly depreciation amounts:

Year of Life Net Book Value (Start of period) Depreciation Expense Unplanned Depreciation Accumulated Depreciation
Yr 2, Q1 96,000 6,000 0 30,000
Yr 2, Q2 90,000 6,000 0 36,000
Yr 2, Q3 84,000 6,000 0 42,000
Yr 2, Q4 78,000 6,000 10,000 58,000
Yr 3, Q1 62,000 *5,167 0 63,167
Yr 3, Q2 56,833 5,167 0 68,334
Yr 3, Q3 51,666 5,167 0 73,501
Yr 3, Q4 46,499 5,166 0 78,667
Yr 4, Q1 41,333 5,167 0 83,834
Yr 4, Q2 36,166 5,167 0 89,001
Yr 4, Q3 30,999 5,167 0 94,168
Yr 4, Q4 25,832 5,166 0 99,334
Yr 5, Q1 20,666 5,167 0 104,501
Yr 5, Q2 15,499 5,167 0 109,668
Yr 5, Q3 10,332 5,167 0 114,835
Yr 5, Q4 5,165 5,165 0 120,000

* Depreciation Expense Per Period = Net Book Value / Remaining Periods in Life

For Year 3, Quarter 1 = 62,000 / 12 = 5,167 DEM

The asset is fully reserved at the end of the useful life.

Example 3: Upward and Downward Unplanned Depreciation

Using the asset from the previous example, you enter another unplanned depreciation of -5,000 DEM in Year 4, Quarter 4, which partially reverses the previous unplanned depreciation. Oracle Assets amortizes the unplanned depreciation amount from the current period since you chose to amortize the unplanned depreciation from Year 2, Quarter 4 (See Example 2) for the same asset. The following table shows quarterly depreciation amounts:

Year of Life Net Book Value (Start of period) Depreciation Expense Unplanned Depreciation Accumulated Depreciation
Yr 4, Q1 41,333 5,167 0 83,834
Yr 4, Q2 36,166 5,167 0 89,001
Yr 4, Q3 30,999 5,167 0 94,168
Yr 4, Q4 25,832 *6,166 <5,000> 95,334
Yr 5, Q1 24,666 6,167 0 101,501
Yr 5, Q2 18,499 6,167 0 107,668
Yr 5, Q3 12,332 6,167 0 113,835
Yr 5, Q4 6,165 6,165 0 120,000

* Depreciation Expense Per Period = Net Book Value / Remaining Periods in Life

For Year 5, Quarter 1 = 24,666 / 4 = 6,167 DEM

The asset is fully reserved at the end of the useful life.

Example 4: Amortized Adjustment after Unplanned Depreciation

You place an asset in service with a life of five years, and a cost of 120,000 DEM. The depreciation method is straight-line. There is no salvage value. The calendar has four periods per year.

You enter an unplanned depreciation in Year 1, Quarter 3, which you amortize from the following period, and then perform an amortized cost adjustment of 30,000 DEM in Year 2, Quarter 1. The new cost is 150,000 DEM and there is no catchup depreciation since this is an amortized adjustment. The following table shows quarterly depreciation amounts:

Year of Life Net Book Value (Start of period) Depreciation Expense Unplanned Depreciation Accumulated Depreciation
Yr 1, Q1 120,000 6,000 0 6,000
Yr 1, Q2 114,000 6,000 0 12,000
Yr 1, Q3 108,000 6,000 10,000 28,000
Yr 1, Q4 92,000 **5,412 0 33,412
Yr 2, Q1 *116,588 ***7,287 0 40,699
Yr 2, Q2 109,301 7,287 0 47,986
Yr 2, Q3 102,014 7,287 0 55,273
Yr 2, Q4 94,727 7,286 0 62,560
Yr 3, Q4 65,580 7,286 0 91,708
Yr 4, Q4 36,433 7,286 0 120,856
Yr 5, Q4 7,286 7,286 0 150,000

* Cost adjustment of 30,000 DEM; new cost is 150,000 DEM

** Depreciation Expense Per Period = Net Book Value / Remaining Periods in Life

For Year 1, Quarter 4, the depreciation expense per period is 92,000 / 17 = 5,412 DEM

*** Depreciation Expense = (New Cost - Accumulated Depreciation)/ Remaining Periods in Life

For Year 2, Quarter 1, the new depreciation expense is (150,000 - 33,412) / 16 = 7,287 DEM

Oracle Assets includes the unplanned depreciation amount when it calculates the accumulated depreciation.

Note: If you choose to amortize unplanned depreciation in the current period, and then perform a cost adjustment on the same asset in the same book, Oracle Assets automatically amortizes the cost adjustment as well as the unplanned depreciation amount. You cannot expense the cost adjustment.

If you choose to expense an unplanned depreciation amount, and then perform an expensed cost adjustment, Oracle Assets will override the unplanned depreciation amount to expense the cost adjustment. You can re-enter the unplanned depreciation for the asset later if necessary.

Related Topics

Entering Unplanned Depreciation for an Asset

Unplanned Depreciation Report

Entering Unplanned Depreciation for an Asset

You can enter unplanned depreciation expense for an asset to comply with your country's accounting rules, or to handle an unusual accounting situation. When you enter unplanned depreciation, you can choose in which period to begin amortization of the asset's remaining net book value.

To enter unplanned depreciation for an asset:

  1. Navigate to the Asset Workbench.

  2. Find the asset for which you want to enter unplanned depreciation, and choose the Books button.

  3. In the Books window, enter a Book. You can enter unplanned depreciation for an asset in a corporate or tax book.

    Note: You cannot mass copy unplanned depreciation amounts from the corporate to the tax book. If you want to enter the same unplanned depreciation in the tax book, you must enter it manually.

  4. Optionally enter a reason for the unplanned depreciation in the Comments field. You can use this field to find the transaction later if necessary.

  5. Choose the Unplanned Depr button to open the Unplanned Depreciation window.

  6. Choose the unplanned depreciation Type. See: Entering QuickCodes.

  7. Enter the amount of unplanned depreciation expense as a positive or negative currency amount. Unless you are entering unplanned depreciation for a credit asset, the unplanned depreciation amount cannot exceed the net book value of the asset.

  8. Enter the complete unplanned depreciation expense account.

  9. Check the Amortize From Current Period check box to amortize the unplanned depreciation starting in the current period.

    Alternatively, leave the check box unchecked if you want to amortize the remaining net book value in a subsequent period. Then, in the period you want amortization to start, enter an unplanned depreciation amount of zero for the same asset and expense account, and check the Amortize From Current Period check box. Oracle Assets amortizes the net book value starting in the period you perform this change.

    Note: The value of this check box overrides the value of the Amortize Adjustment check box in the Books window.

    If you make any amortized adjustment, for example a cost or life adjustment, to the asset after entering an expensed or amortized unplanned depreciation, Oracle Assets begins amortizing the remaining net book value, which includes the unplanned depreciation amount, from the period you make the amortized adjustment.

  10. Choose Done to save your work.

Related Topics

Unplanned Depreciation Report

Bonus Depreciation

The bonus rate is applied based on either the cost or on the nbv following the depreciation method calculation basis. That is, the bonus rate is based on the asset cost for straight-line, but on the nbv for flat rate methods using nbv as the calculation basis:

Bonus Expense=Depreciable Basis*Bonus Rate

You can also set up Oracle Assets to charge bonus reserve to an account that is different from the normal accumulated depreciation expense.

Bonus Rule Accounts

You can set up Oracle Assets to charge bonus depreciation expense to a different account from that of normal depreciation expense.

You can also set up Oracle Assets to charge bonus depreciation reserve to a different account from that of the normal accumulated depreciation account.

Bonus Rule Examples

The examples presented in the following tables illustrate how bonus depreciation works in various situations. and use the rate tables and depreciation methods provided:

Rate Tables

Bonus Rule 1: VEHICLES

From Year To Year Rate
1 1 20%
2 2 10%
3 3 5%

Bonus Rule 2: MACHINERY

From Year To Year Rate
1 3 40%
- - -
- - -

Bonus Rule 3: BUILDINGS

From Year To Year Rate
1 1 20%
2 2 15%
3 3 15%
4 8 -10%

Depreciation Methods

The examples presented in the following tables illustrate how bonus depreciation works in various situations. and use the rate tables and depreciation methods provided:

T_COST Method

Attributes for the following table are Type = TABLE, Basis = COST, Life = 8 year and 1 prorate period per year.

Year Pd. Rate
1 1 0.10
2 1 0.09
3 1 0.06
4 1 0.15
5 1 0.15
6 1 0.15
7 1 0.15
8 1 0.15
9 1 0.00

T_NBV Method

Attributes for the following table are Type = TABLE, Basis = NBV, Life = 3 year and 1 prorate period per year.

Year Pd. Rate
1 1 0.40
2 1 0.50
3 1 1.00
- - -
- - -
- - -
- - -
- - -
- - -

Example 1: Straight-Line Method

The following tables illustrate using bonus rules with a straight-line depreciation method:

Asset Number: 101
Cost: 4000 USD
Date in Service: 01-JAN-2000
Method: STL
Life: 4 years
Bonus Rule: VEHICLES
Quarter Depreciation Expense Accumulated Depreciation Bonus Deprn Expense Bonus Deprn Reserve Total Accum Depreciation NBV
Y1Q1 250 250 200 200 450 3550
Y1Q2 250 500 200 400 900 3100
Y1Q3 250 750 200 600 1350 2650
Y1Q4 250 1000 200 800 1800 2200
Y2Q1 250 1250 100 900 2150 1850
Y2Q2 250 1500 100 1000 2500 1500
Y2Q3 250 1750 100 1100 2850 1150
Y2Q4 250 2000 100 1200 3200 800
Y3Q1 250 2250 50 1250 3500 500
Y3Q2 250 2500 50 1300 3800 200
Y3Q3 200 2700 0 1300 4000 0

Example 2: NBV-Based Table Method

The following tables illustrate calculations using a table-based depreciation method where the depreciable basis is the net book value of the asset:

Asset Number: 102
Cost: 100000 USD
Date in Service: 01-JAN-2000
Method: T_NBV
Life: 3 years
Bonus Rule: MACHINERY
Quarter Depreciation Expense Accumulated Depreciation Bonus Deprn Expense Bonus Deprn Reserve Total Accum Depreciation NBV
Y1Q1 10000 10000 10000 10000 20000 80000
Y1Q2 10000 20000 10000 20000 40000 60000
Y1Q3 10000 30000 10000 30000 60000 40000
Y1Q4 10000 40000 10000 40000 80000 20000
Y2Q1 2500 42500 2000 42000 84500 15500
Y2Q2 2500 45000 2000 44000 89000 11000
Y2Q3 2500 47500 2000 46000 93500 6500
Y2Q4 2500 50000 2000 48000 98000 2000
Y3Q1 500 50500 200 48200 98700 1300
Y3Q2 500 51000 200 48400 99400 600
Y3Q3 500 51500 100 48500 100000 0
Y3Q4 0 51500 0 48500 100000 0

Example 3: Table Method, Negative Bonus Rates

The following tables illustrate calculations using a table-based depreciation method with negative bonus rates:

Asset Number: 103
Cost: 100000 DEM
Date in Service: 01-JAN-2000
Method: T_COST
Life: 8 years
Bonus Rule: BUILDINGS
Quarter Depreciation Expense Accumulated Depreciation Bonus Deprn Expense Bonus Deprn Reserve Total Accum Depreciation NBV
Y1Q1 2500 2500 5000 5000 7500 92500
Y1Q2 2500 5000 5000 10000 15000 85000
Y1Q3 2500 7500 5000 15000 22500 77500
Y1Q4 2500 10000 5000 20000 30000 70000
Y2Q1 2250 12250 3750 23750 36000 64000
Y2Q2 2250 14500 3750 27500 42000 58000
Y2Q3 2250 16750 3750 31250 48000 52000
Y2Q4 2250 19000 3750 35000 54000 46000
Y3Q1 1500 20500 3750 38750 59250 40750
Y3Q2 1500 22000 3750 42500 64500 35500
Y3Q3 1500 23500 3750 46250 69750 30250
Y3Q4 1500 25000 3750 50000 75000 25000
Y4Q1 3750 28750 -2500 47500 76250 23750
Y4Q2 3750 32500 -2500 45000 77500 22500
Y4Q3 3750 36250 -2500 42500 78750 21250
Y4Q4 3750 40000 -2500 40000 80000 0000
Y5Q1 3750 43750 -2500 37500 81250 18750
Y5Q2 3750 47500 -2500 35000 82500 17500
Y5Q3 3750 51250 -2500 32500 83750 16250
Y5Q4 3750 55000 -2500 30000 85000 15000
Y6Q1 3750 58750 -2500 27500 86250 13750
Y6Q2 3750 62500 -2500 25000 87500 12500
Y6Q3 3750 66250 -2500 22500 88750 11250
Y6Q4 3750 70000 -2500 20000 90000 10000
Y7Q1 3750 73750 -2500 17500 91250 8750
Y7Q2 3750 77500 -2500 15000 92500 7500
Y7Q3 3750 81250 -2500 12500 93750 6250
Y7Q4 3750 85000 -2500 10000 95000 5000
Y8Q1 3750 88750 -2500 7500 96250 3750
Y8Q2 3750 92500 -2500 5000 97500 2500
Y8Q3 3750 96250 -2500 2500 98750 1250
Y8Q4 3750 100000 -2500 0 100000 0

Related Topics

Depreciation Calculation for Flat-Rate Methods

Bonus Depreciation Rule Listing

Bonus Depreciation

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 * 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 * 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 * 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. The following table provides examples of how mass copy works in various situations:

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 * 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 illustrated in the following table:

Field 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. The following table shows how mass copy works in these situations:

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 * 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 illustrated in the following table:

FIELD 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. The following table shows how mass copy works in these situations:

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 * 10% = 2500 USD

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

Related Topics

Entering Accounting Rules for a Book

Entering Default Depreciation Rules for a Category

Depreciating Assets Beyond the Useful Life

You can depreciate an asset in the years following its useful life if the asset uses a straight-line or flat-rate depreciation method. You must specify a depreciation limit, defined as a flat amount or as a percentage. Oracle Assets depreciates the asset up to the salvage value during the normal useful life. Then Oracle Assets continues to depreciate it, up to the depreciation limit you choose, in periods after the useful life has ended.

You can set up a default limit for each asset category, book, and range of dates in service in the Asset Categories window. See: Entering Default Depreciation Rules for a Category.

For assets using a straight-line depreciation method, you can use the Set Extended Life window to control the amount of depreciation expense taken for each period. If you do not specify an extended life in years, Oracle Assets continues to depreciate the asset at the same rate it depreciated during the last fiscal year of the asset's normal useful life.

Additions

When you add an asset to a book, category, and date placed in service range for which you set up a default depreciation limit as an amount, Oracle Assets calculates the recoverable cost using the following formula:

Recoverable Cost = Cost - Default Depreciation Limit

For example, an asset cost of 100,000 yen with a depreciation limit of 1 yen has a recoverable cost of 100,000 - 1 = 99,999 yen.

When you add an asset for which you set up a default depreciation limit percentage, Oracle Assets calculates the recoverable cost using the following formula:

Recoverable Cost = Cost * Default Depreciation Limit

For example, an asset cost of 100,000 yen with a depreciation limit of 95% has a recoverable cost of 100,000 * 95% = 95,000 yen.

If you add the asset using Detail Additions, Oracle Assets shows the recoverable cost in the Books window. You can override this value if necessary. If you add the asset using QuickAdditions or Mass Additions, Oracle Assets automatically calculates the recoverable cost for the asset. You can adjust the recoverable cost at any time during the normal useful life of the asset. This does not affect the depreciation expense during the normal useful life, unless the recoverable cost is less than the cost less the salvage value.

Note: You cannot adjust the recoverable cost for assets that do not depreciate using the special depreciation limits. For these assets, the recoverable cost must equal (cost - salvage value).

Restrictions

You cannot perform the following transactions on an asset depreciating under a straight-line method that is beyond its normal useful life:

Depreciation

Depreciation Methods

If you define a depreciation limit, you must use a straight-line or flat-rate depreciation method for the asset.

Depreciation During Normal Useful Life

During the normal useful life of the asset, the amount of depreciation taken per fiscal year depends solely on the cost less the salvage value. For example, you place in service an asset with a cost of 100,000 yen and a salvage value of 1000 yen. The asset depreciates using a straight-line method and a nine year life. Regardless of the depreciation limit, the depreciation expense for this asset is (100,000 - 1000) / 9 = 11,000 yen per year for the first nine years.

Depreciation During Extended Life

In the years following the useful life, Oracle Assets continues to depreciate the asset until accumulated depreciation equals recoverable cost. Note that recoverable cost is calculated by (cost - depreciation limit amount) or (cost * depreciation percent limit). By default, the amount of depreciation taken per period is the minimum of the following:

For assets depreciating under a straight-line method, the corresponding formula is:

Depreciation per period =

min ( (recoverable cost - life-to-date depreciation),

(cost - salvage value) / life in periods) )

For assets using a straight-line depreciation method, you can control the depreciation expense taken per period in the extended life. To do this, specify the length of the extended life in years in the Set Extended Life window.

Depreciation per period = (1/ periods per year)*(Salvage Value/Extended Life in years)

Example 1

You place an asset in service as follows:

The example is illustrated by the following table:

Year of Life Annual Depreciation (Yen) Accumulated Depreciation (Yen)
1 9000 9000
2 9000 18,000
: : :
9 9000 81,000
10 9000 90,000 = (cost - salvage value)
11 9000 = less of (9000, 9999) 99,000
12 999 = less of (9000, 999) 99,999

Recoverable cost is (100,000 - 1) = 99,999 yen.

For the first ten years, Oracle Assets takes an annual depreciation expense of (100,000 - 10,000) / 10 = 9000 yen. If there are four periods per year and you are dividing depreciation evenly, Oracle Assets takes a depreciation expense of 2250 yen per period.

In the 11th year, depreciation expense is also 9000 yen for the year, or 2250 yen per period.

In the 12th year, the depreciation expense is 999 yen. Thus Oracle Assets fully reserves the asset in the first period of this year. Note that in the final year, Oracle Assets does not divide the remaining recoverable cost evenly among the periods in the fiscal year. The depreciation expense per period remains the same in all but the last period of life, when it is equal to the amount necessary to fully reserve the asset.

Example 2

You place another asset in service as follows:

The example is illustrated by the following table:

Year of Life Annual Depreciation (Yen) Accumulated Depreciation (Yen)
1 90,000 90,000
2 90,000 180,000
3 90,000 270,000
4 90,000 360,000
5 90,000 450,000 = (cost - salvage value)
6 25,000 475,000

Recoverable cost is (500,000 * 95%) = 475,000 yen.

For the first five years, Oracle Assets takes an annual depreciation expense of (500,000 - 50,000) / 5 = 90,000 yen. If there are 12 periods per year and you divide depreciation evenly, Oracle Assets takes depreciation expense of 7500 yen per period.

In the sixth year, the depreciation expense is 25,000 yen for the year. Depreciation expense is 7500 yen per month for the first three months, and 2500 yen in the fourth month.

Example 3

You place a third asset in service as follows:

Based on this information, the depreciable basis (4,000,000 - 400,000) is 3,600,000. The recoverable cost (4,000,000 - 1,000) is 3,999,000. The annual depreciation amount (3,600,000/4) is 900,000.

The depreciation over the useful life of the asset is illustrated in the following table:

Year Cost (Won) Salvage Value Deprn Basis Annual Deprn. NBV
1 4,000,000 400,000 3,600,000 900,000 3,100,000
2 4,000,000 400,000 3,600,000 900,000 2,200,000
3 4,000,000 400,000 3,600,000 900,000 1,300,000
4 4,000,000 400,000 3,600,000 900,000 400,000

When the asset has completed its useful life, you query the asset in the Set Extended Life window. You enter the number of years to depreciate the salvage value, for example, three years.

The depreciation over the extended life of the asset is illustrated in the following table:

Year Cost (Won) Salvage Value Deprn Basis Annual Deprn. NBV
5 4,000,000 400,000 400,000 133,333 266,667
6 4,000,000 400,000 400,000 133,333 133,334
7 4,000,000 400,000 400,000 132,334 1,000

To set the extended life of an asset:

  1. Navigate to the Set Extended Life window.

  2. Query the asset for which you want to set the extended life by asset number or description.

  3. Navigate to the Books field.

    A list of values window appears containing the books in which you can set the extended life of the asset.

  4. Select the applicable book.

  5. Enter the number of years over which you want to depreciate the salvage value.

  6. Save your work.