System Setup

Defining Ledgers, Oracle General Ledger Implementation Guide

Customizing the Account Generator for Oracle Assets

Defining the Asset Category Descriptive Flexfield

You can set up the Asset Category descriptive flexfield to store additional information based on the asset category. The Asset Category descriptive flexfield appears in both the Additions and Quick Additions forms.

Enter ATTRIBUTE_CATEGORY_CODE as the reference field to base the descriptive flexfield structure on the value of your Category Flexfield (key flexfield). See: Category Flexfield.

You define your context field values (structure names) to exactly match your concatenated Category Flexfield combinations. For example, if you have a Major Category value of BUILDING, and a Minor Category of OFFICE, your Category Flexfield combination is BUILDING.OFFICE, so you would define BUILDING.OFFICE as your context value (structure name). Similarly, you could define another context value as VEHICLE.DELIVERY. Note that the segment separator, spelling and case must exactly match your Category Flexfield combination.

You need not define a descriptive flexfield structure for each combination of your Category Flexfield; define structures only for those categories where you want to capture additional information (such as license number, insurance policy number, and so on).

Note that you may want to "share" segment names (not necessarily the same as your segment prompts) among different structures of context-sensitive segments if you plan to use flexfield views for reporting.

Related Topics

Overview of Flexfield Views, Oracle Applications Flexfield Guide

Segment Naming Conventions, Oracle Applications Flexfield Guide

Descriptive Flexfield View Example, Oracle Applications Flexfield Guide

Using the Account Generator in Oracle Assets

This essay describes how to use and customize the default Account Generator process in Oracle Assets.

The Account Generator in Oracle Assets utilizes Oracle Workflow. You can view and customize Account Generator processes through the Oracle Workflow Builder. See: Predefined Workflows Embedded in Oracle E-Business Suite, Oracle Workflow Developer User Guide and Overview of the Account Generator, Oracle Applications Flexfield Guide.

Oracle Assets uses the Account Generator to generate accounting flexfield combinations for journal entries. The Account Generator allows you to designate a specific source for each segment in the account for which Oracle Assets creates a journal entry. The Account Generator gives you the flexibility to create journal entries according to your requirements. You can specify to what detail to create journal entries, and you can specify the detail level for each book and account type.

For example, when creating journal entries for asset cost, you can specify that the cost center segment comes from the depreciation expense account of the distribution line you entered for the asset in the Assignments window. Or, you can specify that the cost center comes from the default value you defined for the depreciation book.

Oracle Assets sets up the Account Generator to create journal entries using default assignments when you set up a depreciation book.

Oracle Assets provides two seeded Account Generator processes.

Generate Default Account process
Generate Distribution Detail Account process

The Generate Default Account process creates journal entries without cost center level detail, except for depreciation expense. Using the default assignments, it creates journal entries using the balancing segment from the distribution line in the Assignments window and the natural account segment from the asset category or book, depending on the account type. The Account Generator gets the other segments from the default segment values you entered for the book. You can modify the default Account Generator processes so that Oracle Assets creates journal entries to a different detail level.

The Generate Distribution Detail Account process creates journal entries with cost center level detail. It creates journal entries using the distribution expense account for all segment values, except the natural account segment. The natural account segment is created from the asset category or book, depending on the account type. You can modify the default Account Generator processes so that Oracle Assets creates journal entries to a different detail level.

Tip: You only need to read this essay and modify the default process if you want to use the Account Generator to post to a different level of detail.

Important: Notice that the default process is different for the depreciation expense account and the bonus depreciation expense account. Using the default process, Oracle Assets creates full detail journal entries for depreciation expense. Oracle Assets creates journal entries for depreciation expense using all the segments from the distribution line you enter for the asset in the Assignments window. For bonus depreciation expense, Oracle Assets creates journal entries using the account segment from the asset category and the other segments from the distribution line.

Related Topics

Overview of the Account Generator, Oracle Applications Flexfield Guide.

Decide How to Use the Account Generator

In Release 10, several Oracle Applications products used FlexBuilder to derive account code combinations for certain account transactions. In Release 11, FlexBuilder is replaced by the Account Generator to provide implementation teams with even greater flexibility and a better user interface with Oracle Workflow.

If you are upgrading from Release 10 and used FlexBuilder, then you should perform the equivalent of this setup step as part of your upgrade. See the FlexBuilder chapter of the Oracle Applications Upgrade Preparation Manual.

If you are implementing Oracle Assets for the first time, then you need to review how Assets uses the Account Generator to build Accounting Flexfield code combinations. Consider whether the default Account Generator process is appropriate for each ledger that uses a unique Accounting Flexfield structure. For each structure and ledger, you can choose one of the following:

Use the Generate Default Account process
Use the Generate Distribution Detail Account process
Customize the default Account Generator processes

This decision determines which setup steps your implementation team needs to perform.

Note: You cannot create a new Account Generator process. However, you can customize the default Account Generator processes, as stated above.

Before Using the Account Generator

Before using the Account Generator on a production database in Oracle Assets to generate accounting flexfield combinations, you must:

Define your Accounting Flexfield structure for each ledger.
Define flexfield segment values and validation rules.
Set up Oracle Workflow, Oracle Workflow Guide
Choose whether you want to use the default Account Generator process, or if you need to customize it to meet your accounting needs.
Do one of the following for each ledger:
- Choose to use the default Account Generator process.
- Customize the default Account Generator process, test your customizations, and choose the process for a flexfield structure, if necessary.

The Default Account Generator Processes for Oracle Assets

Evaluate whether the default Account Generator processes meet your accounting requirements. No setup steps are required to use the default processes. The default processes can also be updated later as your needs change. You can make minor changes to the default processes without changing the name.

Note: If you used FlexBuilder in Release 10 but did not customize the default configuration, you can use the default Account Generator process in Release 11, which gives you the same result as the default assignments in FlexBuilder.

Each Account Generator workflow is called an item type. Oracle Assets comes with the following Account Generator item type:

FA Account Generator

The FA Account Generator contains the following workflow processes:

Generate Default Account
Generate Distribution Detail Account
Generate Account Using FlexBuilder Rules

Generate Default Account Process

Use the Generate Default Account process to generate asset-level, book-level, and category-level accounts. You can use the default settings or customize it as required.

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Start Generating Code Combination (Node 1)

This is a standard activity that marks the start of the process.

Get Account Group (Node 2)

This function returns the group to which the account belongs, either book level, category level, or asset level.

Generate Book Level Account (Node 3)

This activity generates the code combination ID (CCID) for a book-level account. The FA Account Generator finds the name of the account for which it is generating code combinations. Possible account names are:

Cost of Removal Clearing
Cost of Removal Gain
Cost of Removal Loss
Deferred Depreciation Expense
Deferred Depreciation Reserve
Depreciation Adjustment
Intercompany Accounts Payable
Intercompany Accounts Receivable
Net Book Value Retired Gain
Net Book Value Retired Loss
Proceeds of Sale Clearing
Proceeds of Sale Gain
Proceeds of Sale Loss
Revaluation Reserve Retired Gain
Revaluation Reserve Retired Loss

Generate Category Level Account (Node 4)

This activity generates the code combination ID (CCID) for a category-level account. The FA Account Generator finds the name of the account for which it is generating code combinations. Possible account names are:

Asset Clearing
Asset Cost
Bonus Expense
Bonus Reserve
Construction-In-Process Clearing
Construction-In-Process Cost
Depreciation Reserve
Revaluation Amortization
Revaluation Reserve

Generate Asset Level Account (Node 5)

This activity generates the code combination ID (CCID) for an asset-level account. The FA Account Generator finds the name of the account for which it is generating code combinations. Possible account names are:

Depreciation Expense

Validate Code Combination (Node 6)

The FA Account Generator validates the generated code combination.

End Generating Code Combination (Node 7)

It is always the End function for an Account Generator process.

Generate Distribution Detail Account Process

Use the Generate Distribution Detail Account process to generate asset-level, book-level, and category-level accounts. You can use the default settings or customize it as required.

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Start Generating Code Combination (Node 1)

This is a standard activity that marks the start of the process.

Get Account Group (Node 2)

This function returns the group to which the account belongs, either book level, category level, or asset level.

Generate Book Level For Distribution Detail (Node 3)

Cost of Removal Clearing
Cost of Removal Gain
Cost of Removal Loss
Deferred Depreciation Expense
Deferred Depreciation Reserve
Depreciation Adjustment
Intercompany Accounts Payable
Intercompany Accounts Receivable
Net Book Value Retired Gain
Net Book Value Retired Loss
Proceeds of Sale Clearing
Proceeds of Sale Gain
Proceeds of Sale Loss
Revaluation Reserve Retired Gain
Revaluation Reserve Retired Loss

Generate Asset Level Account (Node 5)

Depreciation Expense

Validate Code Combination (Node 6)

The FA Account Generator validates the generated code combination.

End Generating Code Combination (Node 7)

It is always the End function for an Account Generator process.

Generate Account Using FlexBuilder Rules Process

If you used FlexBuilder in a previous release to generate account combinations, you can use the Generate Account Using FlexBuilder Rules process to replicate your FlexBuilder setup automatically, without changing any of your predefined FlexBuilder Rules, and without customizing the Account Generator. The Generate Account Using FlexBuilder Rules process includes a function generated during your upgrade from Release 10 to Release 11.

If you are upgrading from Release 10, follow the guidelines in the FlexBuilder chapter of the Oracle Applications Upgrade Preparation Manual.

Exceptions

In a few special cases, Oracle Assets does not use the Account Generator to determine for which account to create journal entries. These special cases are for the clearing account for an asset added using mass additions, and for the depreciation expense account after a reclassification.

When you add an asset using mass additions, Oracle Assets clears the asset clearing or CIP clearing account to which your payables system charged the asset in your corporate book, without using the Account Generator.

When you reclassify an asset, Oracle Assets changes the depreciation expense account segment for all books to that of the new asset category, without using the Account Generator, or the account segment from the distribution you specified for the asset in the Assignments window.

When Generate Accounts is run, all required accounts are generated and stored in fa_distribution_accounts if they pass account validation.

If the account combination already exists in fa_distribution_accounts, Generate Accounts will use the account combination without revalidation.

Related Topics

Setting Up Asset Categories

Assigning an Asset

Customizing the Account Generator for Oracle Assets

Oracle Assets provides two default Account Generator processes for you to use. If the default processes do not satisfy your accounting requirements, you can use the Oracle Workflow Builder to customize the default process or create a new one.

If you want to create a new process to meet your company's needs, use the Oracle Workflow Builder to create a new process, or copy the existing default and change the name before making extensive changes to it.

Customization Guidelines

You can define to what level of detail Oracle Assets creates journal entries by specifying how the Account Generator generates the account combination. You can indicate the source in Oracle Assets for the value of each segment in the account combination.

Important: If you create journal entries to the detail level for segments without qualifiers, the Journal Entry Reserve Ledger Report does not directly reconcile with the general ledger. Most Oracle Assets reports do not report to unqualified segment detail.

Oracle Assets standard reports show the balancing segment from the distribution line, and the cost center and natural account from the asset category or book. They show these values even if you modify the Account Generator process to create journal entries using different segment values.

Functions

In addition to the functions used in the default processes, the FA Account Generator contains several unique functions, which you can use along with the Standard and Standard Flexfield Workflow functions to customize the FA Account Generator.

Note: You cannot delete or modify any of the functions listed in this section.

Get Book Account Name. This function returns only one of the book level accounts.

Get Book Class. This function determines the book class of the book, either corporate, tax, or budget.

Get Book Type Code. This function returns the book type code to be used in the workflow process. To use this function in a process, you must do the following:

Define a new lookup type called Books.
Add the lookup codes you have defined to the lookup type Books. The lookup codes should be valid book type codes you defined in the Book Controls window, for example, MYCORP or MYTAX.
In the Get Book Type Code properties, enter Books in the Result Type field.

Oracle Assets Default Account Generator Assignments

The following table illustrates default segment sources for each segment:

Account Structure

Segment Name	Default Segment Sources
Company	Distribution CCID
Cost Center	Default CCID
Account	Account Segment Value
Product	Default CCID
Sub-Account	Default CCID

Customization Example

The Account Generator uses several sources to fill in the account combination for which to create a journal entry.

Example 1: Cost Center Detail

To create journal entries to the cost center level for all your category-level accounts in your Corporate book, you specify that the Account Generator uses the cost center segment value in the distribution line attribute.

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Using these attributes, Oracle Assets creates journal entries using the balancing and cost center segments from the distribution line. The account segment still comes from the asset category, and the other segments still come from the defaults you entered for the book.

Testing a Customized Account Generator Process

You must test any modified Account Generator process before using it on a production database.

You can test the supplier invoice account generation process by running the SQL script faxagtst.sql. At the system prompt, type:

$FA_TOP/admin/sql/faxagtst.sql

The script prompts you to enter a value for the following parameters:

account_type (for example, asset_cost or asset_cost_clearing)
book
distribution_ccid
account_segment
default_ccid
account_ccid

Implementing a Customized Account Generator Process

If you have customized your Account Generator process for the FA Account Generator item type and assigned a new name to it, use the Account Generator Processes window to associate the new process name with the appropriate Accounting Flexfield structure and item type.

If you made customizations to the default process, but did not change the name of it, you do not need to perform this step.

Choosing the Process for a Flexfield Structure

Navigate to the Account Generator Processes window.

In the System Administrator responsibility, this window is under the navigation path Application > Flexfield > Key > Accounts. In your Oracle Assets responsibility, it is under Setup > Flexfields > Key > Accounts.

Select the structure to which you want to assign a process. You can choose the application, flexfield title, structure, and description from the row list of values.
Specify the FA Account Generator item type.
Specify the process you want to use to generate the accounts.

The Generate Default Account process will default in. If you want to use a different process, such as the Generate Distribution Detail Account process, enter the name of the process you want to use.

Related Topics

Customization Guidelines

Customizing the Account Generator, Oracle Applications Flexfields Guide

Asset Key Flexfield

Oracle Assets uses the asset key flexfield to group your assets by non-financial information. You design your asset key flexfield to record the information you want. Then you group your assets by asset key so you can find them without an asset number.

Warning: Plan your flexfield carefully. Once you have started entering assets using the flexfield, you cannot change it.

Asset Key Flexfield

Owner	Oracle Assets
Flexfield Code	KEY#
Table Name	FA_ASSET_KEYWORDS
Number of Columns	10
Width of Columns	30
Dynamic Inserts Possible	Yes
Unique ID Column	CODE_COMBINATION_ID
Structure Column	None

Group Assets According To Your Needs

Use the asset key flexfield to group your assets. Group your assets according to non-financial information. You can assign the same asset key to many assets to easily find similar assets. All Oracle Assets transaction forms allow you to query using the asset key, and help you find your assets without an asset number.

Asset Key Flexfield Structure

You define your asset key flexfield structure to fit the specific needs of your organization. You choose the number of segments, the length of each segment, and the name and order of each segment in your asset key flexfield. You can define up to ten asset key segments. This key flexfield supports only one structure.

Not Using The Asset Key Flexfield

If you choose not to track assets using the asset key, you must define at least one segment asset key flexfield without validation.

Determine Your Needs

Asset Key Structure

Consider the way you group and query your assets. You need to decide how many levels (segments) your asset key structure needs.

Value Sets

Each segment of your asset key structure needs a value set. The terms you used to group your assets are the values you enter for these value sets.

Tip: The asset key name (all segments concatenated) appears on forms and reports which display only a limited number of characters. You may want to abbreviate some asset key segment values.

Define Your Asset Key Flexfield

Create A Value Set For Each Segment

Create a value set for each segment using the Value Set windows. If you want to set up a segment which is dependent on another segment, create an independent value set for the segment which the user enters first, and a dependent value set for the segment which depends on the value entered. See: Value Set Windows, Oracle Applications Flexfields Guide.

Alternatively you can set up cascading dependencies for your category flexfield value sets.

Alternatively you can set up cascading dependencies for your category flexfield value sets. See: Example of $FLEX$ Syntax, Oracle Applications Flexfields Guide.

Enable Each Segment For Your Asset Asset Key Flexfield

Define new asset key segments using the Define Key Segments form. Remember, you must log into Oracle Assets again before you add assets after you recompile your key flexfield.

If you want to define all valid combinations and prevent users from creating additional combinations while entering assets, uncheck Allow Dynamic Inserts. If you do not need to limit valid combinations, check Allow Dynamic Inserts. You can define valid combinations in the Define Asset Key Flexfield Combinations form. See: Key Flexfield Segments, Oracle Applications Flexfield Guide.

Define Values For Each Segment

Create a list of valid values for each segment using the Segment Values Window. Since Oracle Assets only displays a limited number of characters of the asset key flexfield on forms and reports, you may want to keep the values short. See: Segment Values Window, Oracle Applications Flexfields Guide.

Create Asset Key Flexfield Combinations

Use the Define Asset Key Flexfield Combinations form to enter the combination using the segments you defined. You do not need to use this form to define combinations if you checked Allow Dynamic Inserts.

See: Defining Asset Keys

Example

You decide to use a two segment asset key flexfield. A typical asset key combination might be JET 10.ENGINE. To set up your asset key flexfield you must set up value sets, enable your segments, and enter valid segment values.

First, use the Value Set windows to set up a value set for each segment. For example, you create the value sets Project and Component.

Then use the Key Flexfield Segments window to enable your segments. Enter each segment and the value set for validation in the Segments window.

Now use the Segment Values windows to enter the valid values for each asset key segment. For example, you enter JET 10 as a valid value for the Project segment.

Now, when you enter an asset, you can specify JET 10.ENGINE as the asset key. Since you checked Allow Dynamic Inserts, Oracle Assets creates the combination for you if it doesn't already exist. Or you can create the combination explicitly in the Define Asset Key Flexfield Combinations form.

Related Topics

Key Flexfields by Flexfield Name, Oracle Applications Flexfields Guide

Key Flexfields by Owning Application, Oracle Applications Flexfields Guide

Category Flexfield

Oracle Assets uses the category flexfield to group your assets by financial information. You design your category flexfield to record the information you want. Then you group your assets by category and provide default information that is usually the same for assets in that category.

Warning: Plan your flexfield carefully. Once you have started entering assets using the flexfield, you cannot change it.

Category Flexfield

Owner	Oracle Assets
Flexfield Code	CAT#
Table Name	FA_CATEGORIES
Number of Columns	7
Width of Columns	30
Dynamic Inserts Possible	No
Unique ID Column	CATEGORY_ID
Structure Column	None

Group Assets According To Your Needs

Define the category flexfield to fit the way you group your assets. Use the category flexfield to group your assets. Group your assets according to depreciation rules. By standardizing category names, you can more easily track your assets.

Category Flexfield Structure

You define your category flexfield structure to fit the specific needs of your organization. You must define a major category segment and you can also define up to six subcategory segments. This key flexfield supports only one structure.

Warning: The combination of segment values plus segment value separators must be 30 characters or less, since the combination is used as a context field value for the Asset Category descriptive flexfield. An example of a valid combination is VEHICLE.DELIVERY, which contains 16 characters including the segment separator.

Category Hierarchy

You can set up your category flexfield so that the valid values for the subcategory segment are dependent on the major category value entered. Then, if you have a dependent segment, only the valid values appear in the list of values for that segment.

Category Default Depreciation Rules

You can default asset financial information for new assets based on the asset category. You can enter default depreciation rules for each category flexfield combination for each book. When you add an asset to a book, Oracle Assets defaults the depreciation rules from the asset category. If necessary, you can specify different depreciation rule defaults for different date placed in service ranges.

Category Budget

You can track actual spending versus budgeted amounts for each category. Enter budgeting information based on asset category. Enter budget amounts for each category for each period and then run depreciation projections for your budgeted additions. You can also run reports that compare budgeted and actual spending or show asset additions to categories for which you did not enter budget amounts.

Descriptive Flexfield Based on the Asset Category

You can set up a descriptive flexfield that stores additional information based on the asset category. Enter the asset category flexfield as the reference field, and the concatenated category segments as the context field value for that descriptive flexfield structure.

Determine Your Needs

Category Structure

Consider the way you group your assets. Determine which assets share depreciation information such as prorate convention and depreciation method. You also need to decide how many levels (segments) your category structure needs. Decide which is the top level (major category segment).

You may want to set up your categories to match your chart of accounts. Each chart account defines a major category. You can define at least one subcategory segment to allow for distinctions within a major category.

Tip: You can define up to seven segments for your asset category flexfield. Since Oracle Assets only displays a limited number of characters on its forms and reports, you may wish to use only two or three segments so they can be displayed. Also, since you must define depreciation rules for each category flexfield combination, more segments require more setup and maintenance effort.

Value Sets

Each segment of your category structure needs a value set. The terms you used to group your assets are the values you enter for these value sets.

Tip: The category name (all segments concatenated) appears on forms and reports which only display a limited number of characters. You may want to abbreviate some category segment values.

Dependent Segments

To set up a subcategory segment for which the valid values are dependent on the value of a previously entered segment, create a dependent value set. Create an independent value set for the first segment using the Value Set windows. Then create a dependent value set for the dependent segment. Enter the name of the independent value set, and specify the value which must be entered for the dependent value set to be valid.

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The valid values for the minor category segment are dependent on the value of the major category segment.

Alternatively you can set up cascading dependencies for your category flexfield value sets. See: Example of $FLEX$ Syntax, Oracle Applications Flexfields Guide.

Major Category Qualifier

You must define exactly one Major Category segment when setting up your category flexfield. Specify which segment is your major category segment by entering Yes for the Major Category qualifier in the Define Key Segments form. You can enter capital budgeting information for your major categories.

Define Your Category Flexfield

Create A Value Set For Each Segment

Enable Each Segment For Your Asset Category Flexfield

Define new asset category segments using the Define Key Segments form. For your major category segment, check Enabled for the Major Category qualifier. Remember, you must log into Oracle Assets again to add assets after you recompile your key flexfield.

Because you must enter dependent values for each asset category and assign the category to at least one book, Oracle Assets does not allow dynamic insertion when you use the Category flexfield. Make sure the Allow Dynamic Inserts check box on the Key Flexfield Segments window is unchecked and the flexfield registration (Key Flexfields window) is not modified to alter the availability of dynamic insertion. See: Key Flexfield Segments, Oracle Applications Flexfields Guide.

Define Values For Each Segment

Create a list of valid values for each segment using the Segment Values Window. Since Oracle Assets only displays a limited number of characters of the asset category flexfield on forms and reports, you may want to keep the values short. See: Segment Values Window, Oracle Applications Flexfields Guide.

Tip: If you are setting up the descriptive flexfield on forms where you add assets to reference the asset category, you may want to enter all values in uppercase. Then, when you enter the concatenated category flexfield segments value for which the descriptive flexfield structure applies, you can just enter the segment values in all uppercase separated by your segment separator.

Create Asset Categories

Use the Asset Categories form to enter the asset category name using the segments you defined. Also enter the asset category default information. You must define your category for a book using the Asset Categories form before you can enter assets in that category and book.

See: Setting Up Asset Categories

Example

You decide to use a two segment category flexfield with a dependent segment. A typical category combination might be COMPUTER.HARDWARE, where HARDWARE is a valid value for the second segment only if the value of the first segment is COMPUTER. To set up your category flexfield you must set up value sets, enable your segments, enter valid segment values, and set up the category.

First, use the Value Set windows to set up a value set for each segment. For example, you create the value sets Major, and Minor Computer. Since you want the Minor Computer value set to be dependent on the Major value set, create an independent value set for Major and a dependent value set for Minor Computer. The Independent Value Set on which Minor Computer depends is Major, and the Dependent Default Value is COMPUTER.

Then use the Key Flexfield Segments windows to enable your segments. Enter each segment and the value set for validation in the Segments window. For the major category segment, check Enabled for the Major Category qualifier.

Now use the Segment Values windows to enter the valid values for each subcategory segment. For example, you enter HARDWARE as a valid value for the Minor segment.

Finally, use the Asset Categories window to enter the asset category name and information.

Flexfield Qualifiers

Major Category

You must have exactly one Major Category segment in your Category Flexfield. Oracle Assets uses the Major Category segment for capital budgeting.

Key Flexfields by Flexfield Name, Oracle Applications Flexfields Guide

Key Flexfields by Owning Application, Oracle Applications Flexfields Guide

Descriptive Flexfield Segments, Oracle Applications Flexfields Guide

Location Flexfield

Oracle Assets uses the location flexfield to group your assets by physical location. You design your location flexfield to record the information you want. Then you can report on your assets by location. You can also transfer assets that share location information as a group, such as when you move an office to a new location.

Warning: Plan your flexfield carefully. Once you have started entering assets using the flexfield, you cannot change it.

Location Flexfield

Owner	Oracle Assets
Flexfield Code	LOC#
Table Name	FA_LOCATIONS
Number of Columns	7
Width of Columns	30
Dynamic Inserts Possible	Yes
Unique ID Column	LOCATION_ID
Structure Column	None

Track Asset Location According To Your Needs

Define the location flexfield to fit the way you track your asset locations. Use the location flexfield to track the physical location of your assets. For example, if you do business internationally (or plan to do so in the future), you may want to track the country an asset is in. Other segments you may want include are state, city, and site. If you track asset location to more detail, such as for barcoding, you can also add segments for building and room number.

Location Flexfield Structure

You define your location flexfield structure to fit the specific needs of your organization. You choose the number of segments, the length of each segment, and the name and order of each segment in your location flexfield. You must define a state segment and you can also define up to six other location segments.

Property Tax Reporting

You can run the Property Tax Report for your states. The Property Tax Report sorts your assets by the location segment with the state qualifier set to Yes.

See: Property Tax Report

Mass Transfer By Location

You can transfer assets that share location information as a group. Or you can use the location as a criterion to select assets to transfer between employees or general ledger expense accounts.

See: Transferring Assets

Determine Your Needs

Location Structure

Consider the way you track asset location. You need to decide how many levels (segments) your location structure needs. Also decide which is the state segment.

Value Sets

Each segment of your location structure needs a value set. The terms you used to describe your asset locations are the values you enter for these value sets.

Tip: The location name (all segments concatenated) appears on forms and reports which only display a limited number of characters. You may want to abbreviate some location segment values.

State Qualifier

You must define exactly one State segment when setting up your location flexfield. Specify which segment is your state segment by checking Enabled for the State qualifier in the Segments window. You can run the Property Tax Report for your states.

Define Your Location Flexfield

Create A Value Set For Each Segment

Alternatively you can set up cascading dependencies for your category flexfield value sets. See: Example of $FLEX$ Syntax, Oracle Applications Flexfields Guide.

Enable Each Segment For Your Location Flexfield

Define new location segments using the Define Key Segments form. For your state segment, check Enabled for the State qualifier. Remember, you must log into Oracle Assets again to add assets after you recompile your key flexfield.

If you want to define all valid locations and prevent users from creating additional location flexfield combinations while entering assets, uncheck Allow Dynamic Inserts. If you do not need to limit valid locations, check Allow Dynamic Inserts. You can define valid location flexfield combinations in the Locations form.

If you want to define shorthand aliases for your location flexfield, check Enable Shorthand Flexfield Entry. You can then set up aliases to represent your locations in the Shorthand Aliases window. See: Key Flexfield Segments, Oracle Applications Flexfields Guide. See: Shorthand Aliases, Oracle Applications Flexfields Guide.

Define Values For Each Segment

Create a list of valid values for each segment using the Segment Values form. Since Oracle Assets only displays a limited number of characters of the location flexfield on forms and reports, you may want to keep the values short. See: Segment Values Window, Oracle Applications Flexfields Guide.

Create Locations

Use the Locations form to enter the location name using the segments you defined. You do not need to use this form to define locations if you checked Allow Dynamic Inserts.

See: Defining Locations

You decide to use a three segment location flexfield. A typical location combination might be UK.OXFORDSHIRE.BDG3. To set up your location flexfield you must set up value sets, enable your segments, enter valid segment values, and set up the location.

First, use the Value Set windows to set up a value set for each segment. For example, you create the value sets Country, District Council, and Site.

Then use the Key Flexfield Segments windows to enable your segments. Enter each segment and the value set for validation in the Segments window. For the District Council segment, enable the State qualifier.

Now use the Segment Values windows to enter the valid values for each segment. For example, you enter UK as a valid value for the Country segment.

Finally, use the Locations window to enter the location flexfield combination UK.OXFORDSHIRE.BDG3.

Flexfield Qualifiers

State

You must have exactly one State segment in your Location Flexfield. Oracle Assets uses the State segment for property tax reporting.

Related Topics

Key Flexfields by Flexfield Name, Oracle Applications Flexfields Guide

Key Flexfields by Owning Application, Oracle Applications Flexfields Guide

Specifying System Controls

Use this form to specify your company name, asset numbering scheme, and key flexfield structures.

Prerequisites

Set up your Category, Location, and Asset Key Flexfields. See: Setting Up the Asset Category Flexfield, Setting Up the Asset Key Flexfield, and Setting Up the Location Flexfield.

To specify system controls:

Open the System Controls window.
Enter the enterprise name as you want it to appear on reports.
Enter the Oldest Date Placed In Service, which controls what dates are valid to place assets in service and on what date to begin your calendars.

If you change this field, you do not affect the assets already in the system. However, you cannot place new assets in service before the new date.

Note: You can only update the Oldest Date Placed in Service before you assign any calendars to depreciation books.
Enter the Starting Number at which you want Oracle Assets to begin automatically numbering your assets. Note that some asset numbers may be skipped.

Tip: If you are converting from another system, enter a starting number greater than the number of assets you want to convert so converted assets keep the same number from the previous system. For example, if you are converting 75,000 assets, you may want to enter 100,000 as the Starting Number to reserve the numbers 1 to 100,000 for manual asset numbering. Note that adding the 75,000 assets will increment the automatic numbering sequence by 75,000 (automatically numbered assets will begin at 175,001).

Note that asset numbers with a letter in them are not reserved for automatic asset numbering, since the automatic numbers are a numerical sequence.

If you are using automatic numbering, then manual numbering must be less than the starting asset number that you have in the System Controls window. Oracle Assets does not support asset numbers that exceed 2,000,000,000.
Enter the Location, Category, and Asset Key Flexfield structures you want to use.
Save your work.

Related Topics

Asset Descriptive Details

Defining Locations

If you chose to Allow Dynamic Inserts in the Define Key Segments form, you do not need to define valid locations, since you automatically create locations when you assign assets to assignment.

Prerequisite

Specify the location flexfield structure you want to use. See: Specifying System Controls.

To define location flexfield combinations:

Open the Locations window.
Enter valid location flexfield combinations.
Choose whether to Enable the combination.
Save your work.

Related Topics

Setting Up the Location Flexfield

Defining Asset Keys

If you chose to Allow Dynamic Inserts in the Define Key Segments form, you do not need to define valid asset keys.

Prerequisite

Specify the asset key flexfield structure you want to use. See: Specifying System Controls.

To define location flexfield combinations:

Open the Asset Keys window.
Enter valid asset key flexfield combinations.
Choose whether to Enable the combination.
Save your work.

Related Topics

Setting Up the Asset Key Flexfield

Entering QuickCodes

Use this window to enter QuickCode values in addition to those provided. These values appear in Lists of Values throughout Oracle Assets.

To enter QuickCode values:

Open the QuickCodes window.
Query the QuickCode Name for which you want to define values.

Enter a Value for the QuickCode type.

QuickCode Types and their values are listed in the table below:

QuickCode Type	QuickCode Values
Asset Description	Enter values such as PERSONAL COMPUTER and DELIVERY VEHICLE to standardize asset descriptions.
Journal Entries	You cannot enter new Journal Entry values, but you can change the descriptions.
Queue Name	Enter values such as ACCOUNT HOLD, or LOCATION HOLD to describe your hold queues for Mass Additions. You cannot change values DELETE, ON HOLD, and POST.
Property Type	Enter values such as PERSONAL, REAL, or RESIDENTIAL to describe your property.
Retirement	Enter values such as EXTRAORDINARY and SALE to describe your retirements.
Asset Category	Enter values such as AUTO and COMPUTER to describe your major asset categories. You enter major category values in the QuickCodes window if you are using table-based validation for your asset categories.
Asset Subcategory	Enter values such as SALES and DELIVERY to describe your asset subcategories. For example, you can use these values to create AUTO.SALES and AUTO.DELIVERY asset categories. You enter minor category values in the QuickCodes window if you are using table-based validation for your asset categories.
Unplanned Depreciation Type	You can enter values in addition to UNPLANNED DEPRN to describe different types of unplanned depreciation adjustments.
Lease Frequency	The possible values for Lease Compounding Frequency are: Monthly, Quarterly, Semi-Annually, and Annually. You cannot alter existing or enter new Lease Frequency values, but you can change the existing descriptions.
Lease Payment Type	You can enter lease payment types in addition to Annuity, Balloon Payment, Bargain Purchase Option, and Bargain Renewal Option.

Tip: If you want to create hierarchical asset category flexfield segment values, use the Define Value Set, Define Key Segment, and Define Key Segment Value windows to define your asset category flexfield. Then, to set up the value of the minor segment to be dependent on the value of the major segment, define the Value Set for the minor segment to be dependent on the value of the major segment.

If you create hierarchical asset category values, you do not need to enter category and subcategory QuickCode values.

Tip: The values you enter appear in List of Values windows which allow no more than 12 spaces. You may want to limit your values to 12 characters.

Enter a description of your QuickCode value.
Optionally enter a Disable Date after which this value no longer appears in Lists of Values.
Save your work.

Related Topics

Setting Up the Asset Category Flexfield

Creating Fiscal Years

Specify the start and end dates of each fiscal year for a fiscal year name. Create fiscal years from the oldest date placed in service through at least one fiscal year beyond the current fiscal year. Depreciation will fail if the current fiscal year is the last fiscal year.

You can set up multiple fiscal years in this window. You can assign different fiscal years to your different corporate books. The calendar for a tax book must use the same fiscal year name as the calendar for the associated tax book.

Prerequisite

Specify the Oldest Date Placed in Service. See: Specifying System Controls.

To create a fiscal year:

Open the Asset Fiscal Years window.
Enter a Fiscal Year Name and Description. You can set up multiple fiscal years with different names.

Tip: The name you enter appears in List of Values windows which allow no more than 30 spaces. You may want to limit your name to 30 characters.
Enter the start and end date of each fiscal year.
Enter the Fiscal Year you are defining.
Save your work.

Related Topics

Specifying Dates for Calendar Periods

You can set up as many calendars as you need. Each book you set up requires a depreciation calendar and a prorate calendar. The depreciation calendar determines the number of accounting periods in a fiscal year, and the prorate calendar determines the number of prorate periods in your fiscal year. You can use one calendar for multiple depreciation books, and as both the depreciation and prorate calendar for a book.

Your corporate books can share the same calendar. A tax book can have a different calendar than its associated corporate book. The calendar for a tax book must use the same fiscal year name as the calendar for the associated tax book.

The depreciation program uses the prorate calendar to determine the prorate period which is used to choose the depreciation rate. The depreciation program uses the depreciation calendar and divide depreciation flag to determine what fraction of the annual depreciation expense to take each period. For example, if you have a quarterly depreciation calendar, Oracle Assets calculates one-fourth of the annual depreciation each time you run depreciation.

You must initially set up all calendar periods from the period corresponding to the oldest date placed in service to the current period. You must set up at least one period before the current period. At the end of each fiscal year, Oracle Assets automatically sets up the periods for the next fiscal year.

You can define your calendar however you want. For example, to define a 4-4-5 calendar, set up your fiscal years, depreciation calendar, and prorate calendar with different start and end dates, and fill in the uneven periods. To divide annual depreciation proportionately according to the number of days in each period, enter By Days in the Divide Depreciation field in the Book Controls window.

Prerequisites

Set up your Oldest Date Placed in Service. See: Specifying System Controls.
Set up your fiscal years. See: Creating Fiscal Years.

To specify dates for calendar periods:

Open the Asset Calendars window.
Enter the name of your Calendar.

Tip: The name you enter appears in List of Values windows which allow no more than 15 spaces. You may want to limit your name to 15 characters.
Choose Fiscal or Calendar to append either the fiscal or calendar year to get the accounting period name. If you do not want the fiscal or calendar year automatically appended, choose None.

For example, if your fiscal year runs from June 1 to May 31, and the current date is July 15, 1995, you are in calendar 1995 and fiscal 1996. If you specify FISCAL, your period name is JUL-96. If you specify CALENDAR, your period name is JUL-95.
Enter the Fiscal Year Name you want to use for this calendar.
Enter the number of periods in the fiscal year for this calendar.

Note: You cannot enter more than 365 periods per year.
Enter the Name of this period.

If your periods include the year, such as JAN-1995, and you are using the hyphen (-) as the suffix delimiter, you must use either a two or four-digit year suffix. Oracle Assets automatically adds a four-digit year to the end of the period name if you do not enter a year. Otherwise, you can enter a two-digit year suffix.
Enter the start and end dates of this period.
Save your work.

To change period names for future periods:

Note: Use this procedure if you have already created periods, but need to change them to correspond with GL periods. You can only change the names of future period names.

Open the Asset Calendars window.
Query the calendar for which you want to change period names and scroll to the last period.
From the Main menu, select Edit/Delete Record. Delete all of the periods you plan to rename.
Reenter the deleted periods with the correct name.

Related Topics

Defining Calendars (in Oracle General Ledger), Oracle General Ledger User Guide

Calendar Listing

Setting Up Security by Book

Oracle Assets shares organization and hierarchy information with Oracle Human Resources. If your business does not currently use Oracle Human Resources, you define this data using the Oracle Human Resources windows provided with Oracle Assets.

If you have already implemented Oracle Human Resources, you can skip many of the steps included in this section. Ensure that the organizations and hierarchies you defined in Oracle Human Resources corresponds to the data you want to use with Oracle Assets.

Asset Organization Overview

Organizations are departments, sections, divisions, companies, or other organizational units in your business.

The illustration below depicts ABC Corporation's organization structure. There are three levels of organizations. ABC Corporation, the top-level organization, has three child organizations Americas, Europe, and Asia/Pacific. Each of these organizations also has several child organizations. For example, the Americas organization has the following child organizations: US, Canada, and Brazil.

the picture is described in the document text

ABC Corporation uses the following information to define its default reporting organization hierarchy:

Name	Oracle Assets
Version	1
Organization Name	ABC Corporation

Business Groups

A business group is the highest level of organization and the largest grouping of employees across which you may report.

Oracle Human Resources includes a predefined organization named Setup Business Group. We recommend that you modify the definition of this predefined business group rather than defining a new one. If you define a new business group instead of modifying the predefined Setup Business Group, you need to set the HR: Security Profile profile option to point to the security profile for the new business group. Oracle Human Resources automatically creates a security profile with the business group name when you define a new business group. Oracle Human Resources incorporates all other organizations you specify into the business group you define. See: Security., Oracle Human Resources Documentation Set

You use the Organization window to retrieve the predefined Setup Business Group. Then, you can create your own business group by changing the name of the Setup Business Group. The business group you define here appears in the list of values when you set up the HR: Security Profile profile option.

Note: If you already use Oracle Human Resources, we recommend that you continue using the same business group you defined in Human Resources. If you are using a shared installation of Human Resources, we recommend you use the pre-defined Setup Business Group.

A business group is a special classification of an organization, so you also need to specify its organization type, location, and whether it is an internal or external organization. It is also essential to select the correct legislation code for a business group for correct functioning of Oracle Human Resources. You cannot change the legislation code after entering employees in a business group. See also: Entering Business Group Information., Oracle Human Resources Documentation Set

Important: Employees, organizations, and other entities are partitioned by business group. If you set up more than one business group, your data will be partitioned accordingly. In addition, classifying an organization as a business group is not reversible. Be sure to plan your business group setup carefully. For more information, refer to the Oracle Human Resources Documentation Set.

Organization Window

You use the Organization window in Oracle Assets or Oracle Human Resources to specify all the organizations within your company. By choosing the Others button on this window, you can then set up the corporate and tax book information for that particular organization.

Organization Classifications

Oracle Human Resources uses organization classifications to determine the type of organizations being set up. To flag an organization for use in Oracle Assets, you enable the Asset Organization classification.

An asset organization is an organization that allows you to perform asset-related activities for specific Oracle Assets corporate depreciation books. Oracle Assets uses only organizations designated as asset organizations.

If you require other types of organization classifications, see the Oracle Human Resources Documentation Set.

Related Topics

Creating an Organization, Oracle Human Resources Documentation Set

Setting Up Asset Categories

Organization Hierarchies in Oracle Assets

Organization hierarchies show reporting lines and other hierarchical relationships among the organizations in your business.

You use the Organization Hierarchy window to specify your organization hierarchy.

You need to define the top organization in the hierarchy and at least one organization subordinate to it.

Related Topics

Organization Hierarchies, Oracle Human Resources Documentation Set

Security Profiles

A security profile allows you to control access to Oracle Assets through responsibilities that you create and assign to users of the system. Users can sign on to Oracle Assets only through the responsibilities that you give them. Their responsibilities control what they can see and do in the system.

A responsibility always includes a security profile, which you associate with a work structure such as an organization hierarchy.

See: Security Profiles, Oracle Human Resources Documentation Set

Security List Maintenance Process

This process maintains the lists of organizations, positions, employees, and applicants that security profile holders can access. You should schedule it to run every night to take account of changes made during the day. If a disruption, such as a power outage, occurs while the process is running, you can manually restart it from the Submit Requests window.

See: Security Processes, Oracle Human Resources Documentation Set

Defining Responsibilities

A responsibility is a level of authority in Oracle Applications that allows users to access only those Oracle Applications functions and data appropriate to their roles in an organization. Each responsibility allows access to specific applications, ledgers, windows, functions, and reports.

Related Topics

Defining a Responsibility, Oracle Applications System Administrator Guide

Overview of Oracle Applications Security, Oracle Applications System Administrator Guide

Assigning Responsibilities to Users

When defining Applications users, you need to assign each user to a responsibility. You do this by navigating to the the Users Window in the System Administration responsibility.

See: User's Window, Oracle Applications System Administrator Guide

Setting Up FA: Security Profile

The FA: Security Profile profile option restricts access to the organizations defined in the security profile. The options available for the FA: Security Profile are the previously defined security profile values.

For example, you may want to set up the security profiles for the ABC Corporation. Since there is a one to one correspondence between an organization and a security profile, a logical naming standard for the security profile value would include the organization name and the organization identification number. In this case, the organization ABC Corporation might have a security profile value of ABC_Corporation_100, the organization Americas might have a profile value of Americas_200, and so forth.

Setting User Profile Options, Oracle Applications System Administrator Guide

Defining Depreciation Books

You can define corporate, tax, and budget depreciation books. You must set up your depreciation books before you can add assets to them. You can set up multiple corporate books that create journal entries for different ledger, or to the same ledger. In either case, you must both run depreciation and create journal entries for each depreciation book. For each corporate book, you can set up multiple tax and budget books that are associated with it.

Prerequisites

Specify system controls. See: Specifying System Controls.
Define your calendars. See: Specifying Dates for Calendar Periods.
Set up your Account segment values and combinations. See: Defining Accounts., Oracle General Ledger User Guide
Set up your journal entry formats. See: Defining Journal Sources, Oracle General Ledger User Guide and Defining Journal Categories., Oracle General Ledger User Guide

To define a depreciation book:

Open the Book Controls window.
Enter the name of the book you want to define.

The book name cannot contain any special characters.

Tip: The name you enter appears in List of Values windows which allow no more than 15 spaces. You may want to limit the book name to 15 characters.
Enter a brief, unique description of the book.
Choose a Corporate, Tax, or Budget book class.
Enter calendar information for your book.
Enter accounting rules for your book.
Enter natural accounts for your book.
Enter tax rules for your book.
Save your work.

Related Topics

Specifying Dates for Calendar Periods.

Entering Calendar Information for a Book

In the Book Controls window, choose the Calendar tabbed region.
Optionally enter a disable date for the depreciation book.

Note: Once a book has been disabled, you cannot re-enable it.
Choose whether to Allow Purge for the book.
Enter the ledger for which you want to create journal entries. Allow GL Posting if you want to create journal entries for this book. You cannot allow general ledger posting for your budget books.

You can enter a different ledger for your tax book than the ledger of the associated corporate book. The different ledger must be a secondary ledger of the ledger assigned to the corporate book and the following conditions must be satisfied:
- Oracle Subledger Accounting should be enabled and Use Primary Ledger Amounts should be set to No in the Accounting options of the secondary ledger setup.
- Oracle Assets must be enabled for Oracle Subledger Accounting for the secondary ledger.
Note: When setting up a Tax book that is linked to a Secondary ledger, the chart of accounts and currency must be the same as the Primary ledger which is linked to the Corporate book.
Enter the name of the Depreciation Calendar you want to use for this book.
Enter the name of the Prorate Calendar that you want to use for this book.

Use the prorate calendar with the smallest period size or resolution you need for determining your depreciation rate. For example, you may want to use a monthly prorate calendar in a tax book that uses a quarterly depreciation calendar to allow finer control of the annual depreciation amount for some monthly prorate/method combinations.
Enter the current open period name for this book.

Note: You must set up the depreciation calendar for at least one period before the current period. See: Specifying Dates for Calendar Periods.
Enter the method for dividing the annual depreciation amount over the periods in your fiscal year for this book.
- Choose Evenly to divide depreciation evenly to each period
- Choose By Days to divide it proportionally based on the number of days in each period
Choose whether to depreciate assets in this book that are retired in their first year of life.
Enter the date on which you last calculated depreciation for this book. Oracle Assets updates this date when you run depreciation.
Enter accounting rules for your book.

Related Topics

Defining Ledgers., Oracle General Ledger User Guide

Entering Accounting Rules for a Book

In the Book Controls window, choose the Accounting tabbed region.
To allow amortized changes in this book, check the Allow Amortized Changes check box.
Choose Allow Mass Changes to allow mass changes in this book.
Enter the minimum time you must hold an asset for Oracle Assets to report it as a capital gain when you retire it. If you want Oracle Assets to report a capital gain for all assets when you retire them, enter zero for the threshold.

If you hold the asset for less than the threshold, Oracle Assets reports it as ordinary income.
If you choose to Allow Revaluation, specify revaluation rules:

Revalue Accumulated Depreciation If you do not revalue accumulated depreciation, Oracle Assets transfers the accumulated depreciation to the revaluation reserve account upon revaluation.

Revalue YTD Depreciation Check this check box to revalue year-to-date depreciation.

Retire Revaluation Reserve Check this check box to retire revaluation reserve.

Amortize Revaluation Reserve Check this check box to allow revaluation reserve to be amortized in this book. See: Asset Management in a Highly Inflationary Economy (Revaluation).

Revalue Fully Reserved Assets Check this check box to revalue fully reserved assets.

Maximum Revaluations Enter the maximum number of times an asset in this book can be revalued as fully reserved. If you leave this field blank, Oracle Assets does not limit the number of times you can revalue an asset as fully reserved.

Life Extension Factor Enter the life extension factor for fully reserved assets in this book. Oracle Assets multiplies the life extension factor by the asset original life to determine the asset's new, extended life.

Life Extension Ceiling The life extension ceiling limits the depreciation adjustment when revaluing fully reserved assets.
Choose Allow Group Depreciation to allow group assets to be added in this book. If you choose to allow group depreciation, specify these group depreciation rules:

Allow CIP Depreciation in Group Assets Check this check box to allow depreciation of member CIP asset cost.

Allow Intercompany Member Asset Assignments Check this check box to allow the group asset and its member assets to have a different balancing segment value. If the check box is not checked, the group asset and each of its member assets must have the same balancing segment value.
Prevent Previous Periods Amortized Changes check this check box to prevent backdated transactions on amortized assets. Transactions include additions, adjustments, retirements, and transfers. Value in this field does not impact assets without amortization.

Entering Natural Accounts for a Book

In the Book Controls window, choose the Natural Accounts tabbed region.
Enter Retirement Accounts.

You can set up your gain and loss accounts so that Oracle Assets creates individual journal entries for each component of the gain/loss amount to separate accounts, or to a single account for the net gain or loss.
Enter Deferred Depreciation Reserve and Deferred Depreciation Expense accounts.
Enter the general ledger account that you want to use as an offset account for the entry against accumulated depreciation when you perform reserve adjustments.
Enter the Account Generator default segment values for this book's journal entries.

By default, Oracle Assets creates journal entries without cost center level detail for all accounts except the depreciation expense account. Using the default assignments, it creates journal entries using the balancing segment from the expense account in the Assignments window and the account segment from the asset category or book, depending on the account type. Oracle Assets uses the other segments from the default segment values you enter for the book in this field.

Journal Entries for Depreciation

Journal Entries for Retirements and Reinstatements

Journal Entries for Revaluations

Journal Entries for Tax Accumulated Depreciation Adjustments

Entering Tax Rules for a Book

The Tax Rules tabbed region is only available for tax books. This tabbed region will not appear if you did not select Tax in the Class field in the Book Controls window.

In the Book Controls window, choose the Tax Rules tabbed region.

Check Allow Reserve Adjustments if you want to allow changes to the accumulated depreciation in your tax book.

You can Allow Cost/Expense Ceilings in a depreciation book; however, you cannot apply a cost ceiling and an expense ceiling to the same asset in a depreciation book.
Check Allow CIP Assets if you want to be able to automatically add CIP assets to your tax book when you add them to your corporate book.
If you choose to Allow Mass Copy into this tax book, choose whether to copy additions, adjustments, retirements, and/or salvage value.
In the Group Asset Additions field, choose Copy if you wish to allow mass copy of group assets into this tax book. The default value is Do Not Copy.

Note: Mass Copy does not copy group reclassification transactions that are performed when changing member assets' group assignment. Mass Copy does not copy an type of group adjustment, including group reserve transfer, group retirement adjustments, and group unplanned depreciation.
In the Member Asset Assignments field, choose Copy if you wish to allow mass copy of the member asset group asset assignments into this tax book. The default value is Do Not Copy.
Enter natural accounts for your book.

Determine Adjusted Accumulated Depreciation

Tax Credits

Tax Book Maintenance

Defining Additional Depreciation Methods

Once a depreciation method is in use, it cannot be modified. Therefore, any modification to existing rates within a method will require a new depreciation method to be defined.

To define a calculated depreciation method :

Navigate to the Depreciation Methods window.

Navigation: Setup: Depreciation > Methods
Enter a depreciation Method name and Description.
Select Calculated from the Method Type poplist.
The calculation basis automatically defaults to Cost (NBV is not valid for calculated methods).
Choose whether the depreciation method allows asset depreciation in the year it is retired.
Choose the Exclude Salvage Value check box if the method is to exclude the salvage value from the depreciable basis.
Enter the number of Years and Months of asset life.
Save your work.

To define a table-based depreciation method :

Navigate to the Depreciation Methods window.
Enter a depreciation Method name and Description.
Select Table from the Method Type poplist.
Choose whether to use Cost or NBV as the basis for calculating depreciation from the Calculation Basis poplist.
Choose whether this depreciation method allows asset depreciate in the year it is retired.
Choose the Exclude Salvage Value check box if the method is to exclude the salvage value from the depreciable basis.
Choose whether this method is a straight-line method.
Enter the number of Years and Months of asset life.
Enter the number of Prorate Periods Per Year the method uses.
Choose the Rates button to enter rates in the Depreciation Rates window.
Enter annual depreciation rates.

Rates entered must fully depreciate an asset over its life. When specifying a calculation basis rule of Cost, the sum of all the years' rates for each period must be one. When specifying a calculation basis rule of NBV, the rate for the last year of life for each period must be one and all the other rates must be between zero and one.

Important: For table methods, the annual rate entered for each prorated period must reflect the fraction of the fiscal year the asset was in service. The rate must be prorated based on the number of periods in the year and on the prorate convention.
Save your work.

To define units of production depreciation method:

Navigate to the Depreciation Methods window.
Enter a depreciation Method name and Description.
Select Production from the Method Type poplist.
The calculation basis automatically defaults to Cost (NBV is not valid for units of production methods).
Choose the Exclude Salvage Value check box if the method is to exclude the salvage value from the depreciable basis.
Save your work.

To define a flat-rate depreciation method:

Navigate to the Depreciation Methods window.
Enter a depreciation Method name and Description.
Select Flat from the Method Type poplist.
Choose whether to use Cost or NBV as the basis for calculating depreciation from the Calculation Basis poplist.
Choose whether this depreciation method allows asset depreciation in the year it is retired.
In the Depreciable Basis Rule field, select a depreciable basis rule from the poplist.
Choose the Exclude Salvage Value check box if the method is to exclude the salvage value from the depreciable basis. Salvage value can only be excluded if the flat-rate method uses NBV as the calculation basis.
Check the Polish Adjustment Calculation Basis check box, if applicable. This check box affects the calculation when creating negative cost adjustments to assets depreciating under Polish tax depreciation. See: Adjusting Polish Tax Depreciation Transactions.

Note: This check box is available only if you have selected one of the Polish tax depreciable basis rules as your depreciable basis rule.
Choose the Rates button to enter rates in the Depreciation Rates window.
Enter basic rates.
Enter the adjusting rate, or loading factor.
Save your work.

Note: If using the Japan Tax Reforms features, when navigating to the Depreciation Methods window, the Use Japan NBV Calculation for Impairments check box will be available. Select this check box if the Japan NBV Calculation for Impairments formula is to be used with this depreciation method.

For seeded JP-STL Depreciation Methods, an additional rate line was added to the Depreciation rates as a result of changes to the Japan Tax Reforms and the Use Japan NBV Calculation for Impairments has been enabled. For more information, see Japan Tax Reforms features.

Related Topics

Running Depreciation

Basic Depreciation Calculation

Depreciation Calculation

Depreciation Calculation for Flat-Rate Methods

Depreciation Calculation for Table and Calculated Methods

Depreciation Calculation for the Units of Production Method

Asset Depreciating Under Units of Production

Defining Formula-Based Depreciation Methods

Oracle Assets allows you to define depreciation formulas to calculate annual depreciation rates.

The Depreciation Formula window is used to define depreciation formulas. When finished defining your formula, it is recommended that the formula be tested using the Test Formula tabbed region.

Note: Defining depreciation formulas requires some knowledge of SQL. See: Oracle 8i SQL Reference.

Note: To meet the requirements for the Japan 250% Declining Balance depreciation method, the Guarantee Rate Evaluation check box was added to the Depreciation Method window in addition to the Use Japan NBV Calculation for Impairments. The check boxes are only displayed when the FA: Japan 2007 Tax Reforms Features profile option is set to Yes. For more information, see Japan Tax Reforms features.

To define a depreciation formula:

Navigate to the Depreciation Methods window.

Navigation: Setup: Depreciation > Methods
Enter a depreciation Method name and Description.
Select Formula from the Method Type poplist.
Choose whether to use Cost or NBV as the basis for calculating depreciation from the Calculation Basis poplist.
Optionally select one of the following depreciable basis rules, if NBV is selected as the basis for calculating depreciation:
- Beginning Period Balance
- Period End Average
  
  See: Defining Depreciable Basis Rules.
Choose whether the depreciation method allows asset depreciation in the year it is retired.
Choose the Exclude Salvage Value check box if the method is to exclude the salvage value from the depreciable basis. Salvage value can only be excluded if the flat-rate method uses NBV as the calculation basis.
Choose whether the method is a straight-line method.
Enter the life in years and months.
Choose the Formula button to define depreciation formulas in the Depreciation Formula window.
While in the Define Formula tabbed region, enter a formula by clicking buttons to insert elements into the formula.
Optionally test the formula by choosing the Test Formula tab.
Save the formula.

Note: To meet the requirements for the Japan 250% Declining Balance depreciation method, the Rate Details button was added to the Depreciation Formula window. The Rate Details button is displayed only when one of the seeded Japan depreciation methods is used. For more information, see Japan Tax Reforms features.

To test a depreciation formula:

In the Depreciation Formula window, go to the Test Formula tabbed region.
Optionally enter parameters, such as Life in Years or Salvage Value.

Note: To meet the requirements for the Japan Tax Reforms, the Cost and NBV at Beginning of Year parameters were added to the Test Formula tabbed region. The system displays these parameters only when the FA: Japan 2007 Tax Reforms Features profile option is set to Yes. For more information, see Japan Tax Reforms features.
Review the test results confirming the results depreciated the asset correctly.
Save the formula.

Using the Calculator to Define a Formula

The Depreciation Formula window contains a calculator that is used to insert elements into formulas.

Important: Click on the different buttons on the calculator to enter in the formula in to the display field. Formulas cannot be entered directly into the display field. In addition to the standard calculator keys used to insert constants and operators directly into the display, the Depreciation Formula: Method Name window contains the following special keys: Variables, Functions, and Formulas.

In addition to the standard calculator keys, which insert constants and operators directly into the display, the Depreciation Formula: Method Name window contains the following special keys: Variables, Functions, and Formulas.

Variables

Oracle Assets provides a poplist of variables. When a variable is selected, Oracle Assets inserts the value for the asset it is depreciating. For example, if you enter 1/<Salvage Value>, when depreciation is executed for the asset using the formula, Oracle Assets retrieves the salvage value of the asset when calculating depreciation.

See: How Oracle Assets Calculates Depreciation in a Short Tax Year.

Functions

Displays previously defined formulas in the Formulas poplist. Use the Formulas poplist to insert existing user-defined formulas into the display field.

Formulas

Any formulas you defined previously appear in the Formulas poplist. Use the Formulas poplist to insert existing user-defined formulas into the display field.

Changing the Depreciation Rate at a Specified Point in Time

For some companies, it may be advantageous to depreciate an asset at a certain rate, or at a specific point in time, or to begin depreciating the asset at a different rate. Oracle Assets allows you to define depreciation formulas in which the depreciation rate changes at a specified point in time. In order to define specify a formula the change a depreciation rate at a specified time; define the formula using a combination of the SQL DECODE and SIGN functions.

For more information on SQL, see: Oracle 8i SQL Reference.

Example 1

You have an asset with a life of 15 years. The asset's depreciates at a rate of 0.05 while the asset's remaining life is greater than 10 years. See: How Oracle Assets Calculates Depreciation in a Short Tax Year.

When the asset has a remaining life of 10 years, the asset's depreciates at a rate of 0.07. When the remaining life of the asset is less than 10 years, the asset's depreciates at a rate of 0.08. To accomplish this, enter in the following formula in the Depreciation Formula window:

DECODE (SIGN (<Remaining Life2> - 10), 1, 0.05, 0, 0.07, -1, 0.08)

Example 2

Switch from one depreciation method to another, depending on the rate:

GREATEST (1 / <Life> * 2, 1 / <Remaining Life1>)

The following table provides examples of how to use the available functions:

Function	Example	Result
Decode	Decode(Remaining Life 1, 3, 0.3, 2, 0.2, 0.1)	If Remaining Life 1 is 3, Oracle Assets returns the value 0.3; if Remaining Life 1 is 2, Oracle Assets returns the value 0.2; otherwise, Oracle Assets returns the value 0.1
Greatest	Greatest(2/Life, 0.5)	Oracle Assets returns the greater of 2 divided by the life or 0.5.
Least	Least(2/Life, 0.5)	Oracle Assets returns the smaller of 2 divided by the life or 0.5.
Power	Power(0.5, 3)	Oracle Assets returns 0.5 to the power of 3 (0.125).
Round	Round(2.33333, 4)	Oracle Assets rounds to the fourth position and returns a value of 2.3333.
Sign	Sign(Life - 5)	If Life minus 5 is a positive number, Oracle Assets returns a value of 1; if Life minus 5 is zero, Oracle Assets returns a value of zero. Otherwise, Oracle Assets returns a value of -1.
Sqrt	Sqrt(25)	Oracle Assets returns the square root of 25 (5).

Guidelines for Defining Depreciation Formulas

When you use formula-based depreciation, you have the flexibility to create custom depreciation methods to meet your specific needs. However, it is essential that you plan and thoroughly test your custom depreciation formulas to ensure that your assets will depreciate correctly. Poorly thought out depreciation formulas can cause unexpected and incorrect depreciation rates.

Note: Oracle Assets does not validate custom depreciation formulas.

The following is an example of a poorly thought out depreciation formula:

100 / <Salvage Value> + 0.01

If the salvage value of an asset is greater than 100, the asset depreciates at an expected rate (between 0 and 100). However, if the salvage value of the asset is less than 100, the asset actually appreciates over time.

Also, if the salvage value for an asset is zero, Oracle Assets automatically sets any amount you divide by the salvage value to zero (100 / 0 = 0). In this case, the rate when you use the above depreciation formula would always equal 0.01.

Finally, if the salvage value is set to null for an asset, the value is automatically set to 0. Again, the rate when you use the above depreciation formula would always equal 0.01.

Related Topics

Adding Assets in Short Tax Years

Defining Bonus Depreciation Rules

A bonus rule can have a different bonus rate for each year of the asset's life. You can modify the rate at any time for current and future fiscal years.

You can use bonus rules with corporate books as well as tax books. Bonus rates let you increase the annual depreciation expense for assets using flat-rate, straight-line, table-based, and formula-based depreciation methods. Oracle Assets also allows you to set up negative bonus rates to amortize bonus reserve.

For reporting purposes, you can set the bonus year and rate to 0. Oracle Assets does not calculate any bonus expense.

You can use the One-Time Depreciation check box to limit bonus rules to one fiscal year.

Note: After assigning a bonus rule to an asset, it cannot be removed. The solution is to set up a bonus rule with 0 rate and assign it to the asset or the category default.

To define your bonus rules:

Open the Bonus Depreciation Rules window.
Enter a Bonus Rule name and description.
Check the One-Time Depreciation check box, if applicable.
Enter the fiscal year range of the asset life to which the bonus rate applies.
Enter the bonus rate for each fiscal year range.
If you are setting up a bonus rule for use with Polish tax depreciation, enter a depreciation factor and an alternate depreciation factor. When you enter either a depreciation factor or an alternate depreciation factor, the value in the Rate % field is automatically set to 0%.

Note: You need to ensure the depreciation factor and alternate depreciation factor are set up appropriately. Oracle Assets does not validate that the factor is between a predetermined range.
Save your work.

Bonus Depreciation Rule Listing

Depreciation Methods for the Job Creation and Worker Assistance Act of 2002

Oracle Assets provides special depreciation methods to help you take advantage of the additional first-year depreciation deduction provided by the Job Creation and Worker Assistance Act of 2002.

The Job Creation and Worker Assistance Act of 2002 provides an additional depreciation deduction for both regular tax and alternative minimum tax purposes in the United States. It provides an additional first-year depreciation deduction that is equal to 30 percent of the qualified asset's depreciable basis. The depreciable basis of the asset and the depreciation deduction in the year of purchase and in later years would be adjusted to reflect the additional first-year depreciation deduction. Refer to the Job Creation and Worker Assistance Act of 2002 for compliance.

Table-Based Depreciation Methods for the Job Creation and Worker Assistance Act of 2002

Method	Life	Method Description	Derived From Method
MACRS 30B HY	3, 5, 7, 10, 15, 20 years	MACRS: Half-Year Convention - 30% Bonus	MACRS HY
MACRS 30B MQ	3, 5, 7, 10, 15, 20 years	MACRS: Mid-Quarter Convention - 30% Bonus	MACRS MQ
MACRS STL30B	27.5, 39 years	MACRS: Straight-line Mid-Month Convention - 30% Bonus	MACRS STL MM
AMT 30B HY	2.5 - 20 years	Alternative Minimum Tax: Half-Year Convention - 30% Bonus	AMT HY
AMT 30B MQ	2.5 - 20 years	Alternative Minimum Tax: Mid-Quarter Convention - 30% Bonus	AMT MQ
STL 30B	3 years	Straight-Line - 30% Bonus (Applies to Mid-Month Convention)	N/A

Important: The table-based methods referred to above represent modified versions of methods previously included with Oracle Assets. The methods from which they where derived are listed in the Derived From Method column. If you currently use customized rate tables for tax depreciation methods, you will need to modify the rate tables accordingly.

Example

On June 1, 2002, a corporation acquires and places in service qualified property that costs $1 million. The corporation is allowed an additional first-year depreciation deduction of $300,000. The depreciation calculation is computed as shown in the following table:

Field	Value
Asset Cost:	$1 million
Date placed in service:	June 1, 2002
Prorate date:	January 1, 2002
Life:	5 years
Period:	Yearly calendar ending December 31
Depreciation method:	MACRS 30B HY
Prorate convention:	Half Year

The following table shows the yearly depreciation:

Period	Cost	Depreciation	Accumulated Depreciation	Depreciation Rates for MACRS 30B HY - 5 Years	Depreciation Rates for MACRS HY - 5 Years
FY 2002	1,000,000	440,000	440,000	44%	20%
FY 2003	1,000,000	224,000	664,000	22.4%	32%
FY 2004	1,000,000	134,400	798,000	13.44%	19.2%
FY 2005	1,000,000	80,640	879,040	8.064%	11.52%
FY 2006	1,000,000	80,640	959,680	8.064%	11.52%
FY 2007	1,000,000	40,320	1,000,000	4.032%	5.76%

Depreciation is calculated as follows:

FY 2002 = 44% * 1,000,000 = 440,000

FY 2003 = 22.4% * 1,000,000 = 224,000

FY 2004 = 13.44% * 1,000,000 = 134,400

FY 2005 = 8.064% * 1,000,000 = 80,640

FY 2006 = 8.064% * 1,000,000 = 80,640

FY 2007 = 4.032% * 1,000,000 = 40,320

Depreciation rates of MACRS 30B HY - 5 years are modified from MACRS HY - 5 years table rates, listed as follows:

FY 2002 = 30% + 20% * (1 - 30%) = 44%

FY 2003 = 32% * (1 - 30%) = 22.4%

FY 2004 = 19.2% * (1 - 30%) = 13.44%

FY 2005 = 11.52% * (1 - 30%) = 8.064%

FY 2006 = 11.52% * (1 - 30%) = 8.064%

FY 2007 = 5.76% * (1 - 30%) = 4.032%

Changing the Depreciation Method

You can change the depreciation method of existing assets to take the additional first-year depreciation deduction. You can perform a prior period depreciation method change and execute the depreciation method change as an expensed adjustment. The catch-up expense will be taken in the current period of change.

You can change the depreciation method of an asset via the Asset Workbench. For a range of affected assets, use Mass Change to perform the depreciation method change. See: Changing Financial and Depreciation Information.

You cannot perform an expensed adjustment if you have previously performed an amortized adjustment for the asset.

Note: If you need to adjust prior fiscal year accumulated depreciation, you should perform the reserve adjustment on your assets prior to any depreciation method change.

Adjusting Accumulated Depreciation for the Prior Fiscal Year

Because the additional first-year depreciation deduction retroactively applies to assets placed in service after September 10, 2001, many users may have closed their previous fiscal year before the additional first-year depreciation deduction was available.

If you need to file amended prior year tax returns, you can use Reserve Adjustment to adjust the depreciation for one or more assets for the previous fiscal year in your tax book.

See: Adjusted Tax Book Accumulated Depreciation.

Depreciation Methods for the American Jobs Creation Act of 2004

Oracle Assets provides special depreciation methods for qualified leasehold and restaurant improvements to help you take advantage of the additional first-year depreciation deduction provided by the American Jobs Creation Act of 2004.

The American Jobs Creation Act of 2004 provides that qualified leasehold and restaurant improvements placed in service between October 22, 2004 and Dec. 31, 2005 will be depreciated over 15 years using the straight-line method. These improvements can still qualify for the 50 percent bonus depreciation if they were placed in service before Dec. 31, 2004.

The 50 percent bonus depreciation provides an additional first-year depreciation deduction that is equal to 50 percent of the qualified asset's depreciable basis. The depreciable basis of the asset and the depreciation deduction in the year of purchase and in later years will be adjusted to reflect the additional first-year depreciation deduction.

The qualified asset is depreciated using the same depreciation method, useful life, and convention that apply to the qualified asset for both regular tax and alternative minimum tax (AMT) purposes in the United States.

Table-Based Depreciation Methods for the American Jobs Creation Act of 2004

The following table shows the table-based depreciation methods Oracle Assets provides to help you take advantage of the additional first-year depreciation deduction allowed by the American Jobs Creation Act of 2004. The same depreciation method, life, and prorate convention apply to both regular tax and AMT purposes on the qualified asset.

Table-Based Depreciation Methods for the American Jobs Creation Act of 2004
Method	Life	Method Description	Derived From Method
STL 50B HY	15 years	Straight-Line Half-Year Convention with 50% Bonus Depreciation	MACRS STL HY
STL 50B MQ	15 years	Straight-line Mid-Quarter Convention with 50% Bonus Depreciation	MACRS STL MQ

Important: The table-based methods referred to above represent modified versions of methods previously included with Oracle Assets. The methods from which they were derived are listed in the Derived From Method column. If you currently use customized rate tables for tax depreciation methods, you will need to modify the rate tables accordingly.

Example

On December 1, 2004, a corporation acquires and places in service a qualified asset that costs $1 million. The corporation is allowed an additional first-year depreciation deduction of $500,000. The depreciation calculation is computed as shown in the following table:

Field	Value
Asset Cost	$1 million
Date Placed in Service	December 1, 2004
Prorate Date	July 1, 2004
Life	15 years
Period	Yearly calendar ending December 31
Depreciation Method	STL 50B HY
Prorate Convention	Half Year

The above depreciation method, life and prorate convention are used for both regular tax and AMT purposes on the qualified asset.

The following table shows the yearly depreciation:

Yearly Depreciation Calculations
Period	Cost	Depreciation	Accumulated Depreciation	Depreciation Rates for STL 50B HY - 15 Years	Depreciation Rates for MACRS STL HY - 15 Years
FY 2004	1,000,000	516,665	516,665	51.6665%	3.333%
FY 2005	1,000,000	33,335	550000	3.3335%	6.667%
FY 2006	1,000,000	33,335	583,335	3.3335%	6.667%
FY 2007	1,000,000	33,330	616,665	3.333%	6.666%
FY 2008	1,000,000	33,335	650,000	3.3335%	6.667%
FY 2009	1,000,000	33,335	683,335	3.3335%	6.667%
FY 2010	1,000,000	33,330	716,665	3.333%	6.666%
FY 2011	1,000,000	33,335	750,000	3.3335%	6.667%
FY 2012	1,000,000	33,335	783,335	3.3335%	6.667%
FY 2013	1,000,000	33,330	816,665	3.333%	6.666%
FY 2014	1,000,000	33,335	850,000	3.3335%	6.667%
FY 2015	1,000,000	33,335	883,335	3.3335%	6.667%
FY 2016	1,000,000	33,330	916,665	3.333%	6.666%
FY 2017	1,000,000	33,335	950,000	3.3335%	6.667%
FY 2018	1,000,000	33,335	983,335	3.3335%	6.667%
FY 2019	1,000,000	16,665	1,000,000	1.6665%	3.333%

Depreciation is calculated as follows:

FY 2004 = 51.6665% * 1,000,000 = 516,665

FY 2005 = 3.3335% * 1,000,000 = 33,335

FY 2006 = 3.3335% * 1,000,000 = 33,335

FY 2007 = 3.333% * 1,000,000 = 33,330

FY 2008 = 3.3335% * 1,000,000 = 33,335

FY 2009 = 3.3335% * 1,000,000 = 33,335

FY 2010 = 3.333% * 1,000,000 = 33,330

FY 2011 = 3.3335% * 1,000,000 = 33,335

FY 2012 = 3.3335% * 1,000,000 = 33,335

FY 2013 = 3.333% * 1,000,000 = 33,330

FY 2014 = 3.3335% * 1,000,000 = 33,335

FY 2015 = 3.3335% * 1,000,000 = 33,335

FY 2016 = 3.333% * 1,000,000 = 33,330

FY 2017 = 3.3335% * 1,000,000 = 33,335

FY 2018 = 3.3335% * 1,000,000 = 33,335

FY 2019 = 1.6665% * 1,000,000 = 16,665

Depreciation rates of STL 50B HY - 15 years are modified from MACRS STL HY - 15 years table rates, listed as follows:

FY 2004 = 50% + 3.333% * (1 - 50%) = 51.6665%

FY 2005 = 6.667% * (1 - 50%) = 3.3335%

FY 2006 = 6.667% * (1 - 50%) = 3.3335%

FY 2007 = 6.666% * (1 - 50%) = 3.333%

FY 2008 = 6.667% * (1 - 50%) = 3.3335%

FY 2009 = 6.667% * (1 - 50%) = 3.3335%

FY 2010 = 6.666% * (1 - 50%) = 3.333%

FY 2011 = 6.667% * (1 - 50%) = 3.3335%

FY 2012 = 6.667% * (1 - 50%) = 3.3335%

FY 2013 = 6.666% * (1 - 50%) = 3.333%

FY 2014 = 6.667% * (1 - 50%) = 3.3335%

FY 2015 = 6.667% * (1 - 50%) = 3.3335%

FY 2016 = 6.666% * (1 - 50%) = 3.333%

FY 2017 = 6.667% * (1 - 50%) = 3.3335%

FY 2018 = 6.667% * (1 - 50%) = 3.3335%

FY 2019 = 3.333% * (1 - 50%) = 1.6665%

Changing the Depreciation Method

You cannot perform an expensed adjustment if you have previously performed an amortized adjustment for the asset.

Note: If you need to adjust prior fiscal year accumulated depreciation, you should perform the reserve adjustment on your assets prior to any depreciation method change.

Defining Depreciable Basis Rules

Depreciable Basis Rules

Oracle Assets provides the Depreciable Basis Rules feature to accommodate depreciation method setup requirements not met by the Cost or NBV calculation basis types. The combination of depreciable basis rule and depreciation method determine how depreciable basis is derived.

Applying Depreciable Basis Rules

Choose the desired depreciable basis rule when you set up the depreciation methods. When you create transactions, the depreciable basis of the asset is calculated based on the depreciable basis rules specified in the Depreciable Basis Rule field.

Note: You can only use depreciable basis rules with flat-rate based methods, with the following exceptions: Beginning Period Balance and Period End Average can also be used with formula-based methods.

Use Recoverable Cost
Use Transaction Period Basis
Use Fiscal Year Beginning Basis
Flat Rate Extension
Period End Balance
Beginning Period Balance
Period End Average
Year to Date Average Balance
Year to Date Average with Half Year Rule
Year End Balance
Year End Balance with Positive Reduction Amount
Year End Balance with Half Year Rule

The following depreciable basis rules are applicable only to Polish tax depreciation. See: Polish Tax Depreciable Basis Rules.

Note: When you use one of the Polish Tax depreciable basis rules, the Method Type must be set to Flat and the Calculation Basis must be set to Cost.

Polish 30% with a Switch to Declining Classic and Flat Rate
Polish 30% with a Switch to Flat Rate
Polish Declining Modified with a Switch to Declining Classic and Flat Rate
Polish Declining Modified with a Switch to Flat Rate
Polish Standard Declining with a Switch to Flat Rate

The depreciable basis rules provide calculations as described below:

Use Recoverable Cost Rule

When the Use Recoverable Cost rule is used, the depreciable basis is equal to the new recoverable cost or Cost - Salvage Value. This depreciable basis rule is only available for the Flat rate method with Cost basis.

Current Period Depreciation Expense with Use Recoverable Cost = (Cost - Salvage Value) * Annual Depreciation Rate / Periods per Year

Example: Use Recoverable Cost

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

Asset A

Asset Setup Item	Asset Setup Information
Depreciation Method:	Flat Rate with Cost Basis Depreciation Basis Rule: Use Recoverable Cost
Depreciation Rate:	30%
Salvage Value:	20%
Group DPIS / Prorate Date:	01-JAN-2000
Depreciation Calendar:	Monthly

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

Asset A - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	10,000
Period Performed:	Mar-2000
Amortization Start Date:	01-MAR-2000

The table below illustrates asset and calculated amounts for the first four periods of 2000.

	Jan-2000	Feb-2000	Mar-2000	Apr-2000
Asset A Cost	30,000	30,000	40,000	40,000
Asset A Depreciable Basis	24,000	24,000	32,000	32,000
Asset A Depreciation Expense	600	600	800*	800
Asset A Accumulated Depreciation	600	1,200	2,000	2,800

* Depreciation Expense in Mar-2000 = 32,000 * 30% / 12 = 800

Use Transaction Period Basis Rule

This depreciable basis rule is available for Flat rate method with NBV basis only. NBV basis = Cost - Salvage Value - Accumulated Depreciation. The basis will be reset at the end of each fiscal year. If you have performed an amortize adjustment, the NBV basis will be reset at the amortization date.

Use Transaction Period Basis = (Cost - Salvage Value) - Accumulated Depreciation

Use Fiscal Year Beginning Basis Rule

This depreciable basis rule is available for the Flat rate method with NBV basis only. NBV basis = Cost - Salvage Value - Accumulated Depreciation as of the beginning of the fiscal year. The basis will be reset at the end of each fiscal year.

Use Fiscal Year Beginning Basis = (Cost - Salvage Value) - Accumulated Depreciation as of Beginning of the Fiscal Year

If you have performed an adjustment, the NBV basis will be reset as follows:

Use Fiscal Year Beginning Basis = Current Cost - Current Salvage Value - Recalculated Accumulated Depreciation as of the Beginning of the Fiscal Year

Flat Rate Extension Rule

This rule supports depreciation method changes from flat-rate and NBV-based methods, to flat-rate and cost-based methods, which are legally required in Japan.

When you change the depreciation method from flat-rate and NBV-based, to flat-rate and cost-based depreciation, the adjustment is amortized. The depreciable basis becomes the NBV on the date amortization begins.

When this rule is applied to flat-rate and NBV-based depreciation methods, the behavior is the same as when the depreciable basis rule is set to Use Fiscal Year Beginning Basis. You can only apply this rule to flat-rate and cost/NBV-based depreciation methods.

For group assets, when member asset tracking is enabled with the Allocate Group Amount option, the depreciable basis of the fully reserved member assets will be removed from the group level depreciable basis. When member tracking is enabled with the Calculate Member Asset Amounts option, and the depreciation method selected is Cost, the depreciable basis of the fully reserved member assets will be removed from the group level depreciable basis.

The following is an example of flat rate extension.

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

Asset Before Adjustment Added in Q1-1998

Asset Setup Item	Asset Setup Information
Method Type	Flat-Rate
Calculation Basis	NBV
Rate	20%
Exclude Salvage Value	On
Depreciable Basis Rule	Use Fiscal Year Beginning Basis
Period	Q1-1998
Calculation Basis Rate	NBV, 20%
Cost	1,000,000
Activity	Add new Assets

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

Asset After Adjustment Adjusted in Q1-2000

Asset Setup Item	Asset Setup Information
Method Type	Flat-Rate
Calculation Basis	Cost
Rate	25%
Salvage Value	10%
Exclude Salvage Value	Off
Depreciable Basis Rule	Flat Rate Extension
Period	Q1-2000
Calculation Basis Rate	Cost, 25%
Cost	1,000,000
Activity	Amortized Adjustment: Method Change Amortization Start Date: 01-JAN-2000 (Q1-2000)

The table below illustrates depreciation calculated after the adjustment.

Period	Cost	Depreciable Basis	Depreciation Expense	Accumulated Depreciation
Q4-1998	1,000,000	1,000,000	50,000	200,000
Q1-1999	1,000,000	800,000	40,000	240,000
Q2-1999	1,000,000	800,000	40,000	280,000
Q3-1999	1,000,000	800,000	40,000	320,000
Q4-1999	1,000,000	800,000	40,000	360,000
Q1-2000	1,000,000	540,000	33,750	393,750
Q2-2000	1,000,000	540,000	33,750	427,500
Q3-2000	1,000,000	540,000	33,750	461,250
Q4-2000	1,000,000	540,000	33,750	495,000
Q1-2001	1,000,000	540,000	33,750	528,750
Q2-2001	1,000,000	540,000	33,750	562,500
Q3-2001	1,000,000	540,000	33,750	596,250
Q4-2001	1,000,000	540,000	33,750	630,000

The following are calculations for the period Q1-2000:

[Depreciable Basis] = (1,000,000 - [Salvage Value]) - [Accumulated Depreciation] + [YTD Depreciation]

= (1,000,000 - 1,000,000*10%) - 360,000 - 0 = 540,000
[Depreciation Expense] = [Depreciable Basis] * [Rate] * (1/ [Period])

= 540,000 * 0.25 * (1/4) = 33,750

Period End Balance Rule

When the Period End Balance rule is used, current period depreciation is calculated as follows:

Current Period Depreciation Expense for Period End Balance = (Group Asset Balance at Period End * Annual Depreciation Rate) / Periods Per Year

Example: Period End Balance

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

Asset Setup Item	Asset Setup Information
Group Asset:	Group A
Member Assets:	Asset 1 Asset 2
Depreciation Method:	Flat Rate with Cost Basis Depreciable Basis Rule: Period End Balance
Depreciation Rate:	30%
Depreciation Calendar:	Monthly
Group Asset DPIS / Prorate Date:	01-JAN-2000

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

Asset 1 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	10,000
Period Performed:	Mar-2000
Amortization Start Date:	01-MAR-2000

The table below illustrates asset and calculated amounts for the first four periods of 2000.

	Jan-2000	Feb-2000	Mar-2000	Apr-2000
Asset 1	10,000	10,000	20,000	20,000
Asset 2	20,000	20,000	20,000	20,000
Group A Cost	30,000	30,000	40,000	40,000
Group A Depreciable Basis	30,000	30,000	40,000	40,000
Group A Depreciation	750	750	1,000*	1,000
Group A Accumulated Depreciation	750	1,500	2,500	3,500

* Group Depreciation Expense in Mar-2000 = (Group Asset Depreciable Basis * Annual Depreciation Rate) / Periods Per Year = (40,000 * 30%) / 12 = 1,000

Beginning Period Balance Rule

When the Beginning Period Balance rule is used, current period depreciation is calculated as follows:

Current Period Depreciation Expense for Beginning Period Balance = (Group Asset Balance at Beginning of Period *Annual Depreciation Rate)/ Periods Per Year

Example: Beginning Period Balance

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

Asset Setup Item	Asset Setup Information
Group Asset:	Group A
Member Assets:	Asset 1 Asset 2
Depreciation Method:	Flat Rate with Cost Basis Depreciation Basis Rule: Beginning Period Balance
Depreciation Rate:	30%
Depreciation Calendar:	Monthly
Group Asset DPIS / Prorate Date:	01-JAN-2000

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

Asset 1 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	10,000
Period Performed:	Mar-2000
Amortization Start Date:	01-MAR-2000

The table below illustrates asset and calculated amounts for the first four periods of 2000.

	Jan-2000	Feb-2000	Mar-2000	Apr-2000
Asset 1	10,000	10,000	20,000	20,000
Asset 2	20,000	20,000	20,000	20,000
Group A Cost	30,000	30,000	40,000	40,000
Group A Depreciable Basis	0	30,000	30,000	40,000
Group A Depreciation	0	750	750	1,000*
Group A Accumulated Depreciation	0	750	1,500	2,500

* Group Depreciation Expense in Apr-2000 = (Group Asset Depreciable Basis) * Annual Depreciation Rate / Periods Per Year = 40,000 * 30% / 12 = 1,000

Period End Average Rule

When the Period Average Balance rule is used, current period depreciation is calculated as follows:

Current Period Depreciation Expense for Period Average Balance = (End of Current Period Balance + End of Previous Period Balance) /2 * Rate / Periods Per Year.

Example: Period End Average

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

Asset Setup Item	Asset Setup Information
Group Asset:	Group A
Member Assets:	Asset 1 Asset 2
Depreciation Method:	Flat Rate with Cost Basis Depreciation Basis Rule: Period Average Balance
Depreciation Rate:	30%
Depreciation Calendar:	Monthly
Group DPIS / Prorate Date:	01-JAN-2000

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

Asset 1 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	10,000
Period Performed:	Mar-2000
Amortization Start Date:	01-MAR-2000

The table below illustrates asset and calculated amounts for the first four periods of 2000.

	Jan-2000	Feb-2000	Mar-2000	Apr-2000
Asset 1	10,000	10,000	20,000	20,000
Asset 2	20,000	20,000	20,000	20,000
Group A Cost	30,000	30,000	40,000	40,000
Group A Depreciable basis	15,000	30,000	35,000*	40,000
Group A Depreciation	375	750	875**	1,000
Group A Accumulated Depreciation	375	1,125	2,000	3,000

* Group Asset Depreciable Basis in Mar-2000 = (End of Current Period Balance + End of Previous Period Balance) / 2 = (40,000 + 30,000) / 2 = 35,000

** Group Asset Depreciation Expense Mar-2000 = Group Asset Depreciable Basis * Annual Depreciation Rate / Periods Per Year = 35,000 * 30% / 12 = 875

Year to Date (YTD) Average Balance Rule

When the Year to Date Average Balance rule is used, current period depreciation is calculated as follows:

Current Period Depreciation Expense for Year to Date Average Balance = (End of Current Period Balance + End of Previous Year Balance) / 2 * Rate / Periods Per Year

Example: Year to Date (YTD) Average Balance

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

Asset Setup Item	Asset Setup Information
Group Asset:	Group A
Member Assets:	Asset 1 - cost adjusted in Mar-2000 Asset 2 - cost adjusted in Feb-2000
Depreciation Method:	Flat Rate with Cost Basis Depreciation Basis Rule: YTD Average Balance
Depreciation Rate:	30%
Depreciation Calendar:	Monthly
Group DPIS / Prorate Date:	01-JAN-2000

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

Asset 1 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	10,000
Period Performed:	Mar-2000
Amortization Start Date:	01-MAR-2000

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

Asset 2 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	20,000
Period Performed:	Feb-2000
Amortization Start Date:	01-FEB-2000

The table below illustrates asset and calculated amounts for the first four periods of 2000.

	Jan-2000	Feb-2000	Mar-2000	Apr-2000
Asset 1	10,000	10,000	20,000	20,000
Asset 2	20,000	40,000	40,000	40,000
Group A Cost	30,000	50,000	60,000	60,000
Group A Depreciable Basis	15,000	25,000*	30,000**	30,000
Group A Depreciation	375	625	750***	750
Group A Accumulated Depreciation	375	1,000	1,750	2,500

* Group Asset Depreciable Basis in Feb-2000 = (End of Current Period Balance + End of Previous Year Balance) / 2 = (50,000 + 0) / 2 = 25,000

** Group Asset Depreciable Basis in Mar-2000 = (End of Current Period Balance + End of Previous Year Balance) / 2) = (60,000 + 0) / 2 = 30,000

*** Group Asset Depreciation Expense Mar-2000 = (Group Asset Depreciable Basis * Annual Depreciation Rate) / Periods Per Year = (30,000 * 30%) / 12 = 750

Year to Date (YTD) Average with Half Year Rule

This depreciable basis rule is only available for the Flat rate method with Cost basis. When the Year to Date Average with Half Year rule is used, current period depreciation is calculated as follows:

Current Period Depreciation Expense for Year to Date Average with Half Year rule = (((End of Current Period Balance + End of Previous Year Balance) / 2 * Rate) - Year to Date Depreciation ) / Remaining Fiscal Periods

Example: Year to Date (YTD) Average with Half Year Rule

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

Asset Setup Item	Asset Setup Information
Group Asset:	Group A
Member Assets:	Asset 1 Asset 2
Depreciation Method:	Flat Rate with Cost Basis Depreciation Basis Rule: Year to Date Average with Half Year rule
Depreciation Rate:	30%
Depreciation Calendar:	Monthly
Group DPIS / Prorate Date:	01-JAN-2000

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

Asset 1 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	10,000
Period Performed:	Mar-2000
Amortization Start Date:	01-MAR-2000

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

Asset 2 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	20,000
Period Performed:	Feb-2000
Amortization Start Date:	01-FEB-2000

The table below illustrates asset and calculated amounts for the first four periods of 2000.

	Jan-2000	Feb-2000	Mar-2000	Apr-2000
Asset 1	10,000	10,000	20,000	20,000
Asset 2	20,000	40,000	40,000	40,000
Group A Cost	30,000	50,000	60,000	60,000
Group A Depreciation	375*	647.73**	797.73***	797.73
Group A Accumulated Depreciation	375	1,022.73	1,820.46	2,618.19
Group A Year to Date Depreciation	375	1,022.73	1,820.46	2,618.19

* Group A Depreciation Expense in Jan-2000 = (((End of Current Period Balance + End of Previous Year Balance) / 2) x Annual Depreciation Rate - Year to Date Depreciation ) / Remaining Fiscal Year Periods = ((( 30,000 + 0 ) / 2 ) x 30% - 0 ) / 12 = 375

** Group A Depreciation Expense in Feb-2000 = (((End of Current Period Balance + End of Previous Year Balance) / 2) x Annual Depreciation Rate - Year to Date Depreciation ) / Remaining Fiscal Year Periods = ((( 50,000 + 0 ) / 2 ) x 30% - 375 ) / 11 = 647.73

*** Group A Depreciation Expense in Mar-2000 = (((End of Current Period Balance + End of Previous Year Balance) / 2) x Annual Depreciation Rate - Year to Date Depreciation ) / Remaining Fiscal Year Periods = ((( 60,000 + 0 ) / 2 ) x 30% - 1,022.73 ) / 10 = 797.73

Year End Balance Rule

End of Current Fiscal Year balance. This depreciable basis rule is available for the Flat method with NBV basis only.

Current Period Expense for Year End Balance = Current Period YTD Depreciation - Prior Period Ytd Depreciation

Example: Year End Balance - NBV Basis

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

Asset Information

Asset Setup Item	Asset Setup Information
Group Asset:	Group A
Member Assets:	Asset 1 Cost adjusted in FY2002 Asset 2

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

Group Asset A Setup

Asset Setup Item	Asset Setup Information
Depreciation Method:	Flat Rate with NBV Basis Depreciation Basis Rule: Year End Balance
Depreciation Rate:	30%
Group DPIS / Prorate Date:	01-JAN-2000
Depreciation Calendar:	Yearly

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

Asset 1 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	10,000
Period Performed:	FY-2002
Amortization Start Date:	01-JAN-2002

The table below illustrates asset and calculated amounts for four years.

	FY 2000	FY 2001	FY 2002	FY 2003
Asset 1	10,000	10,000	20,000	20,000
Asset 2	20,000	20,000	20,000	20,000
Group Asset A Cost	30,000	30,000	40,000	40,000
Group Asset A Depreciable Basis	30,000	21,000	24,700*	17,290
Group A Depreciation Expense	9,000	6,300	7,410**	5,187
Group A Accumulated Depreciation	9,000	15,300	22,710	27,897

* Group Asset A Depreciable Basis in FY-2002 = Cost - Salvage Value - Accumulated Depreciation = 40,000 - 15,300 - 24,700

(Additions + / - Adjustments) - (Proceeds of Sales - Cost of Removal) > 0

** Group Asset Depreciation Expense in FY-2002 = Depreciable Basis * Annual Rate = 24,700 * 30% = 7,410

Year End Balance with Positive Reduction Amount Rule

This rule can be applied to Flat method with Cost or NBV basis. The Reduction Rate field is enabled only for group and member assets, and it is not enabled for standalone assets.

In Canada, if the following calculation is greater than zero in any given period for a group asset, then half of the excess amount must be deducted from the depreciable basis when calculating the group depreciation amount. The calculation is as follows:

(Additions + / - Adjustments) - Proceeds of Sales - Cost of Removal > 0

However, some groups may be exempted from 50% rule. In order to accommodate Canada's 50% rule, you must select the Year End Balance with Positive Reduction Amount depreciable basis rule for the group asset depreciation method, and enter the reduction rate of 50% for the group asset.

You may enter a reduction rate for the group asset if the group asset has this depreciable basis rule setup in the depreciation method.

Note: The Year End Balance with Positive Reduction Amount rule is applicable only to Group Assets (not for standalone assets).

Example: Year End Balance with Positive Reduction Amount

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

Asset Information

Asset Setup Item	Asset Setup Information
Group Asset:	Group A
Member Assets:	Asset 1 Cost adjusted in FY2002 Asset 2

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

Group Asset A Setup

Asset Setup Item	Asset Setup Information
Depreciation Method:	Flat Rate with NBV Basis Depreciation Basis Rule: Year End Balance with Positive Adjustment Amount
Depreciation Rate:	30%
Reduction Rate:	50%
Group DPIS / Prorate Date:	01-JAN-2000
Depreciation Calendar:	Yearly

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

Asset 1 - Current Period Cost Adjustment

Asset Setup Item	Asset Setup Information
Cost Adjustment:	10,000
Period Performed:	FY-2002
Amortization Start Date:	01-JAN-2002

The table below illustrates asset and calculated amounts for four years.

	FY 2000	FY 2001	FY 2002	FY 2003
Asset 1	10,000	10,000	20,000	20,000
Asset 2	20,000	20,000	20,000	20,000
Group Asset A Cost	30,000	30,000	40,000	40,000
Group Asset A Depreciable Basis	15,000*	25,500**	22,850***	20,995
Group A Depreciation Expense	4,500	7,650	6,855****	6,298.50
Group A Accumulated Depreciation	4,500	12,150	19,005	25,303.50

* Group A Depreciable Basis in FY 2000 = Cost - Salvage Value - Accumulated Depreciation - Reduced Amount = 30,000 - (30,000 * 50%) = 15,000

** Group A Depreciable Basis in FY 2001 = 30,000 - 4,500 = 25,500

*** Group A Depreciable Basis in FY 2002 = 40,000 - 12,150 - 10,000 * 50% = 22,850

**** Group A Depreciation Expense in FY 2002 = Depreciable Basis * Annual Rate = 22,850 * 30% = 6,855

Year End Balance with Half Year Rule

The Year End Balance with Half Year Rule basis rule can be applied to the Flat method with NBV basis. The Reduction Rate field is enabled only for group and member assets, and it is not enabled for standalone assets.

In India, if a member asset is added during the second half of the fiscal year, the depreciation rate is reduced by 50% for the member asset. Otherwise, 100% of depreciate rate can be used if the member asset is placed into service during the first half of the fiscal year.

In order to accommodate India's 50% rule, you must select the Year End Balance with Half Year Rule depreciable basis rule for the group asset depreciation method, and enter the reduction rate of 50% for the group asset. You also need to enter the Mid Year Start Date on the Fiscal Year setup window.

If the date placed in service is in the first half of the year, use 100% of Group Depreciation Rate.
If the date placed in service is in the second half of the year, use 50% of Group Depreciation Rate.

You may enter a reduction rate for the group asset if the group asset has this depreciable basis rule setup in the depreciation method.

Example: Year End Balance with Half Year Rule

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

Asset Setup Item	Asset Setup Information
Group Asset:	Group A
Member Assets:	Asset 1 DPIS: 01-JAN-2000 Asset 2 DPIS: 01-AUG-2000

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

Group Asset A Setup

Asset Setup Item	Asset Setup Information
Depreciation Method:	Flat Rate with NBV Basis Depreciation Basis Rule: Year End Balance with Half Year Rule
Depreciation Rate:	30%
Reduction Rate:	50%
Group DPIS / Prorate Date:	01-JAN-2000
Depreciation Calendar:	Yearly
Mid Year Start Date:	01-JUL-2000

The table below illustrates asset and calculated amounts for four years.

	FY 2000	FY 2001	FY 2002	FY 2003
Asset 1	10,000	10,000	10,000	10,000
Asset 2	20,000	20,000	20,000	20,000
Group Asset A Cost	30,000	30,000	30,000	30,000
Group Asset A Depreciable Basis	20,000*	24,000***	16,800	11,760
Group A Depreciation Expense	6,000**	7,200	5,040	3,528
Group A Accumulated Depreciation	6,000	13,200	18,240	21,768

* Group A Depreciable Basis in FY 2000 = Cost - Salvage Value - Accumulated Depreciation - Reduced Amount = 30,000 - (20,000 * 50%) = 20,000

** Group A Depreciation Expense in FY 2000 = Depreciable Basis * Annual Rate = 20,000 * 30% = 6,000

***Group A Depreciable Basis in FY 2001 = 30,000 - 6,000 = 24,000

Defining Depreciable Basis Rules

To define depreciable basis rules:

Navigate to the Depreciation Methods window.
In the Method field, enter a name for your depreciation method.
In the Description field, enter a description for your depreciation method.
Select Flat from the Method Type poplist.
Choose whether to use Cost or NBV as the basis for calculating depreciation from the Calculation Basis Rule poplist.
Select the Depreciable Basis Rule.

Note: When you select Flat in the Method Type field, the Depreciable Basis Rule field becomes required. You can update the defaulted value.
Check the Depreciate in Year Retired check box if you want depreciation calculated in the year retired.
Check the Exclude Salvage Value check box if you want this method to exclude the salvage value from the calculation of Cost - Salvage Value.
Choose the Rates button to enter rates in the Depreciation Rates window.
Enter the basic rates.
Enter the adjusting rate, or loading factor.
Save your work.

Polish Tax Depreciation

Oracle Assets provides five seeded depreciable basis rules to support Polish tax depreciation requirements. Each of these five depreciable basis rules is comprised of several Polish tax depreciation methods. These Polish tax depreciation methods are in effect in a predetermined or conditional sequence. For example, if a depreciable basis rule consists of three Polish tax depreciation methods, then the first Polish tax depreciation method may be effective in fiscal year one, the second Polish tax depreciation method may be effective from fiscal year two through fiscal year four, and the third Polish tax depreciation method may be effective for the remaining fiscal years until the asset is fully depreciated.

Polish tax depreciation methods are similar to depreciation methods, except they cannot be set up or used individually to depreciate assets. That is, you cannot assign an asset to depreciate using one of these Polish tax depreciation methods.

Note: If you are using Polish tax depreciation methods, you cannot use Depreciation Projections to determine future depreciation. You can use What-if Depreciation.

The Polish tax depreciation methods are as follows:

30% Flat Rate: Assets depreciate at the rate of 30 percent in the period of addition and depreciation is suspended for the rest of the periods in the fiscal year.
Declining Classic: Assets depreciate at the defined flat rate multiplied by the depreciation factor. When this Polish tax depreciation method is used in a depreciable basis rule, it always begins in the second fiscal year.
Declining Modified: Assets depreciate at the defined flat rate multiplied by the alternate depreciation factor.
Standard Declining: Assets depreciate at the defined flat rate multiplied by the depreciation factor.
Flat Rate: Assets depreciate at the defined flat rate.

The Polish tax depreciable basis rules are each comprised of two or more of the Polish tax depreciation methods listed above. The depreciable basis rules for Polish tax depreciation are as follows:

Polish 30% with a Switch to Declining Classic and Flat Rate
Polish 30% with a Switch to Flat Rate
Polish Declining Modified with a Switch to Declining Classic and Flat Rate
Polish Declining Modified with a Switch to Flat Rate
Polish Standard Declining with a Switch to Flat Rate

To set up Polish tax depreciation:

Define a new depreciation method in the Depreciation Methods window. See: Defining Additional Depreciation Methods.
Choose one of the Polish tax depreciable basis rules from the Depreciable Basis Rule list of values, for example, Polish 30% with a Switch to Flat Rate. See: Polish Tax Depreciable Basis Rules.
Navigate to the Depreciation Rates window and enter the flat rate.
Save your work.
Navigate to the Bonus Depreciation Rules window and define the bonus rule. See: Defining Bonus Depreciation Rules.
Enter the depreciation factor and the alternate depreciation factor. See: Defining Bonus Depreciation Rules.
Navigate to the Books window and assign the method and bonus rule to the asset. See: Entering Financial Information (Detail Additions Continued).

You can also assign the method to an asset category. See: Entering Default Depreciation Rules for a Category.

Polish Tax Depreciable Basis Rules

Oracle Assets provides five seeded polish tax depreciable basis rules:

Polish 30% with a Switch to Declining Classic and Flat Rate

In the first fiscal year this depreciable basis rule uses the 30% Flat Rate Polish tax depreciation method. The asset is depreciated at a fixed depreciation rate of 30 percent in the period of addition. After that, the depreciation is suspended for the remainder of the periods in the fiscal year. There should be no catchup depreciation even if an adjustment is made in subsequent periods in the first fiscal year after the 30 percent depreciation has been charged.

In the second fiscal year, the depreciation rate is calculated using the Declining Classic Polish tax depreciation method. The formula to be used by the Declining Classic Polish tax depreciation method is calculated by multiplying the flat rate with the depreciation factor defined in the Bonus Depreciation Rules window.

The formula used to calculate the rate of depreciation used by the Declining Classic Polish tax depreciation method is as follows:

Flat Rate * Depreciation Factor

For example, if the flat rate = 20 percent and the depreciation factor is 2, then the resulting depreciation rate for this Polish tax depreciation method is:

20% * 2 = 40%

Depreciation in the second fiscal year is always calculated on the basis of cost. Depreciation in the subsequent fiscal years (where the Declining Classic depreciation Polish tax depreciation method is used) is calculated on the following basis:

Cost - Depreciation Reserve + First Year Reserve

After the end of the second fiscal year, at the beginning of every fiscal year, a test is performed to verify whether the estimated depreciation amount calculated based on the Declining Classic Polish tax depreciation method is equal to or less than the estimated depreciation amount calculated based on the flat rate.

If the estimated depreciation calculation based on the Declining Classic Polish tax depreciation method is equal to or less than the estimated depreciation amount calculated based on the flat rate (the depreciation basis for the Flat Rate method is always cost), then the depreciation method from that fiscal year onward needs to switch to the Flat Rate method. Otherwise, depreciation will continue with the Declining Classic Polish tax depreciation method.

Example - Polish 30% with a Switch to Declining Classic and Flat Rate

Month	Year 1: 30% (3000.00)	*Year 2: 20% 2 (4000.00)**	*Year 3: 20% 2 (2400.00)**	Year 4: 20% (600.00)
M1	3000.00	333.33	200.00	166.67
M2	0.00	333.33	200.00	166.67
M3	0.00	333.33	200.00	166.67
M4	0.00	333.33	200.00	99.99
M5	0.00	333.33	200.00	--
M6	0.00	333.33	200.00	--
M7	0.00	333.33	200.00	--
M8	0.00	333.33	200.00	--
M9	0.00	333.33	200.00	--
M10	0.00	333.33	200.00	--
M11	0.00	333.33	200.00	--
M12	0.00	333.37	200.00	--

In this example:

The asset cost is $10,000.
Year 1 uses the 30% Flat Rate Polish tax depreciation method with a depreciation basis of 10,000.
Year 2 uses the Declining Classic Polish tax depreciation method with a depreciation basis of 10,000.
Year 3 uses the Declining Classic Polish tax depreciation method with a depreciation basis of 6000.

Note: In this case, the basis has changed to Cost - Reserve + First year reserve.
Year 4 uses the Flat Rate method with a depreciation basis of 10,000.

The depreciation reserve amounts at the end of each year are as follows:

Year 1: 3000.00
Year 2: 7000.00
Year 3: 9400.00
Year 4: 10,000.00

Polish 30% with a Switch to Flat Rate

In the second fiscal year this depreciable basis rule automatically switches from the 30% Flat Rate Polish tax depreciation method to the Flat Rate method.

Example - Polish 30% with a Switch to Flat Rate

Month	Year 1: 30% (3000.00)	Year 2: 20% (2000.00)	Year 3: 20% (2000.00)	Year 4: 20% (2000.00)	Year 5: 20% (1000.00)
M1	3000.00	166.67	166.67	166.67	166.67
M2	0.00	166.67	166.67	166.67	166.67
M3	0.00	166.67	166.67	166.67	166.67
M4	0.00	166.67	166.67	166.67	166.67
M5	0.00	166.67	166.67	166.67	166.67
M6	0.00	166.67	166.67	166.67	166.65
M7	0.00	166.67	166.67	166.67	--
M8	0.00	166.67	166.67	166.67	--
M9	0.00	166.67	166.67	166.67	--
M10	0.00	166.67	166.67	166.67	--
M11	0.00	166.67	166.67	166.67	--
M12	0.00	166.63	166.63	166.63	--

In this example:

The asset cost is $10,000.
Year 1 uses the 30% Flat Rate Polish tax depreciation method with a depreciation basis of 10,000.
Years 2 through 5 use the Flat Rate method with a depreciation basis of 10,000.

The depreciation reserve amounts at the end of each year are as follows:

Year 1: 3000.00
Year 2: 5000.00
Year 3: 7000.00
Year 4: 9000.00
Year 5: 10,000.00

Polish Declining Modified with a Switch to Declining Classic and Flat Rate

When you use this depreciable basis rule the depreciation for the first fiscal year is based on the Declining Modified Polish tax depreciation method. The rate of depreciation used by the Declining Modified Polish tax depreciation method is obtained by multiplying the flat rate with the alternate depreciation factor.

The formula used to calculate the rate of depreciation used by the Declining Modified Polish tax depreciation method is as follows:

Flat Rate * Alternate Depreciation Factor

For example if the flat rate is 20 percent and the alternate depreciation factor is 3, then the depreciation rate is:

20% * 3 = 60%

At the beginning of the second fiscal year the Polish tax depreciation method automatically switches from the Declining Modified Polish tax depreciation method to the Declining Classic Polish tax depreciation method. The depreciation rate is calculated using the Declining Classic Polish tax depreciation method.

The formula used to calculate the rate of depreciation used by the Declining Classic Polish tax depreciation method is as follows:

Flat Rate * Depreciation Factor

For example if the flat rate is 20 percent and the depreciation factor is 2, then the resulting depreciation rate for this Polish tax depreciation method is:

20% * 2 = 40%

Depreciation in the second fiscal year is always calculated on the basis of cost. Depreciation in the subsequent fiscal years (where the Declining Classic Polish tax depreciation method is used), is calculated on the following basis:

Cost - Depreciation Reserve + First Year Reserve

After the second fiscal year, at the beginning of every fiscal year, a test is performed to verify whether the estimated depreciation amount calculated based on the Declining Classic Polish tax depreciation method is equal to or less than the estimated depreciation amount calculated based on the flat rate.

If the estimated depreciation calculation based on the Declining Classic Polish tax depreciation method is equal to or less than the estimated depreciation amount calculated based on the flat rate, then from that fiscal year onward, the depreciation method needs to change to the Flat Rate method. Otherwise depreciation will continue with the Declining Classic Polish tax depreciation method.

Example - Polish Declining Modified with a Switch to Declining Classic and Flat Rate

Month	*Year 1: 20% 2.5 (5000.00)**	*Year 2: 20% 2 (4000.00)**	*Year 3: 20% 2 (1000.00)**
M1	416.67	333.33	200.00
M2	416.67	333.33	200.00
M3	416.67	333.33	200.00
M4	416.67	333.33	200.00
M5	416.67	333.33	200.00
M6	416.67	333.33	--
M7	416.67	333.33	--
M8	416.67	333.33	--
M9	416.67	333.33	--
M10	416.67	333.33	--
M11	416.67	333.33	--
M12	416.63	333.37	--

In this example:

The asset cost is $10,000.
Year 1 uses the Declining Modified Polish tax depreciation method with a depreciation basis of 10,000.
Year 2 uses the Declining Classic Polish tax depreciation method with a depreciation basis of 10,000.
Year 3 uses the Declining Classic Polish tax depreciation method with a depreciation basis of 6000.

Note: In this case, the basis has changed to Cost - Reserve + First year reserve.

The depreciation reserve amounts for each year are as follows:

Year 1: 5000.00
Year 2: 9000.00
Year 3: 10,000.00

Polish Declining Modified with a Switch to Flat Rate

The Polish tax depreciation method used in the first fiscal year is the Declining Modified Polish tax depreciation method. The calculations are similar to the first year calculation in the Polish Declining Modified with a Switch to Declining Classic and Flat Rate depreciable basis rule. See: Polish Declining Modified with a Switch to Declining Classic and Flat Rate.

In the second fiscal year, the depreciation method automatically changes to the Flat Rate method and the asset continues to depreciate using the Flat Rate method until the asset is fully depreciated.

Example - Polish Declining Modified with a Switch to Flat Rate

Month	*Year 1: 20% 2.5 (5000.00)**	Year 2: 20% (2000.00)	Year 3: 20% (2000.00)	Year 4: 20% (1000.00)
M1	416.67	166.67	166.67	166.67
M2	416.67	166.67	166.67	166.67
M3	416.67	166.67	166.67	166.67
M4	416.67	166.67	166.67	166.67
M5	416.67	166.67	166.67	166.67
M6	416.67	166.67	166.67	166.65
M7	416.67	166.67	166.67	--
M8	416.67	166.67	166.67	--
M9	416.67	166.67	166.67	--
M10	416.67	166.67	166.67	--
M11	416.67	166.67	166.67	--
M12	416.63	166.63	166.63	--

In this example:

The asset cost is $10,000.
Year 1 uses the Declining Modified Polish tax depreciation method with a depreciation basis of 10,000.
Years 2 through 4 use the Flat Rate method with a depreciation basis of 10,000.

The depreciation reserve amounts at the end of each year are as follows:

Year 1: 5000.00
Year 2: 7000.00
Year 3: 9000.00
Year 4: 10,000.00

Polish Standard Declining with a Switch to Flat Rate

The Polish tax depreciation method used in the first fiscal year is the Standard Declining Polish tax depreciation method. The rate of depreciation is derived by multiplying the flat rate with the depreciation factor.

The formula used to calculate the rate of depreciation used by the Declining Standard Polish tax depreciation method is as follows:

Flat Rate * Depreciation Factor

For example if the flat rate is 20 percent and the depreciation factor is 3, then the depreciation rate is:

20% * 3 = 60%

After the first fiscal year, at the beginning of every fiscal year a test is performed to verify whether the estimated depreciation amount calculated based on the Standard Declining Polish tax depreciation method is equal to or less than the estimated depreciation amount calculated based on the flat rate.

If the estimated depreciation calculation based on the Standard Declining Polish tax depreciation method is equal to or less than the estimated depreciation amount calculated based on the flat rate, then the depreciation method from that fiscal year onward changes to the Flat Rate method. Otherwise, depreciation should continue with the Standard Declining Polish tax depreciation method. The depreciation basis for the Standard Declining Polish tax depreciation method is always net book value.

Example - Polish Standard Declining with a Switch to Flat Rate

Month	*Year 1: 20% 2 (4000.00)**	*Year 2: 20% 2 (2400.00)**	Year 3: 20% (2000.00)	Year 4: 20% (1600.00)
M1	333.33	200.00	166.67	166.67
M2	333.33	200.00	166.67	166.67
M3	333.33	200.00	166.67	166.67
M4	333.33	200.00	166.67	166.67
M5	333.33	200.00	166.67	166.67
M6	333.33	200.00	166.67	166.67
M7	333.33	200.00	166.67	166.67
M8	333.33	200.00	166.67	166.67
M9	333.33	200.00	166.67	166.67
M10	333.33	200.00	166.67	99.97
M11	333.33	200.00	166.67	--
M12	333.37	200.00	166.63	--

In this example:

The asset cost is $10,000.
Year 1 uses the Standard Declining Polish tax depreciation method with a depreciation basis of 10,000.
Year 2 uses the Standard Declining Polish tax depreciation method with a depreciation basis of 6000.
Years 3 and 4 use the Flat Rate method with a depreciation basis of 10,000.

The depreciation reserve amounts at the end of each year are as follows:

Year 1: 4000.00
Year 2: 6400.00
Year 3: 8400.00
Year 4: 10,000.00

Adjusting Polish Tax Depreciation Transactions

You can perform cost adjustments on assets that are depreciating using Polish Tax Depreciation transactions. The cost adjustments can be for either a positive (higher cost) or a negative (lower cost) amount. You can perform a current dated adjustment, which means the adjustment applies to any date in the current period, or you can perform a prior period adjustment.

Related Topics

Negative Cost Adjustments

Positive Cost Adjustments

Negative Cost Adjustments

A negative cost adjustment occurs when the cost of an asset is reduced from the current cost. When you perform negative cost adjustments, depreciation is calculated based on whether you have checked the Polish Adjustment Calculation Basis check box.

Note: The Polish Adjustment Calculation Basis check box applies only to negative cost adjustments.

Polish Adjustment Calculation Basis Checked

If this check box is checked, Oracle Assets uses special rules to calculate the new depreciation basis. The new depreciation basis is calculated using the following formula:

Old Cost - Net Book Value of Adjustment Amount

To calculate the net book value of the adjustment amount, Oracle Assets first calculates the calculated proportion of the reserve. This is calculated using the following formula:

Old Reserve * Adjustment Amount/Old Cost

Oracle Assets then uses the calculated proportion of the reserve to calculate the net book value of the adjusted amount using the following formula:

Adjusted Amount - Calculated Proportion of Reserve

For example, assume the old cost is 20,000, the old reserve is 10,800, and the adjustment amount is 8,000. Oracle Assets first calculates the proportion of the reserve:

10,800 * 8,000/20,000 = 4,320

Oracle Assets then calculates the net book value of the adjustment amount:

8,000 - 4,320 = 3,680

Finally, Oracle Assets calculates the new depreciation basis:

20,000 - 3,680 = 16,320

Polish Adjustment Calculation Basis Unchecked

If this check box is unchecked, Oracle Assets uses the following formula to calculate the new depreciation basis:

Old Basis - Old Basis * Adjustment Amount/Old Cost

For example, if the old cost is 20,000 and the old basis is 12,000, the adjustment amount is 8,000. The new basis is calculated as follows:

12,000 - 12,000 * 8,000/20,000 = 7,200

Example: Current Dated Negative Cost Adjustment: Polish Adjustment Calculation Basis Checked

In the following example:

Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.

In this example, the negative cost adjustment occurs in year 2, month 8.

The following table shows depreciation information for year one:

Note: The rounding in this table and subsequent tables is approximate.

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	666.67	666.67	20,000.00
2	20,000.00	666.67	1,333.33	20,000.00
3	20,000.00	666.67	2,000.00	20,000.00
4	20,000.00	666.67	2,666.67	20,000.00
5	20,000.00	666.67	3,333.33	20,000.00
6	20,000.00	666.67	4,000.00	20,000.00
7	20,000.00	666.67	4,666.67	20,000.00
8	20,000.00	666.67	5,333.33	20,000.00
9	20,000.00	666.67	6,000.00	20,000.00
10	20,000.00	666.67	6,666.67	20,000.00
11	20,000.00	666.67	7,333.33	20,000.00
12	20,000.00	666.67	8,000.00	20,000.00

The following table shows depreciation information for year two:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	400.00	8,400.00	12,000.00
2	20,000.00	400.00	8,800.00	12,000.00
3	20,000.00	400.00	9,200.00	12,000.00
4	20,000.00	400.00	9,600.00	12,000.00
5	20,000.00	400.00	10,000.00	12,000.00
6	20,000.00	400.00	10,400.00	12,000.00
7	20,000.00	400.00	10,800.00	12,000.00
8	12,000.00	544.00	11,344.00	16,320.00
9	12,000.00	544.00	11,888.00	16,320.00
10	12,000.00	544.00	12,432.00	16,320.00
11	12,000.00	544.00	12,976.00	16,320.00
12	12,000.00	544.00	13,520.00	16,320.00

The following table shows depreciation information for year three:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	12,000.00	272.00	13,792.00	16,320.00
2	12,000.00	272.00	14,064.00	16,320.00
3	12,000.00	272.00	14,336.00	16,320.00
4	12,000.00	272.00	14,608.00	16,320.00
5	12,000.00	272.00	14,880.00	16,320.00
6	12,000.00	272.00	15,152.00	16,320.00
7	12,000.00	272.00	15,424.00	16,320.00
8	12,000.00	272.00	15,696.00	16,320.00
9	12,000.00	272.00	15,968.00	16,320.00
10	12,000.00	272.00	16,240.00	16,320.00
11	12,000.00	80.00	16,320.00	16,320.00
12

Example: Back Dated Negative Cost Adjustment: Polish Adjustment Calculation Basis Checked

In the following example:

Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.

In this example, the negative cost adjustment occurs in year 3, month 7, and is back dated to year 2, month 8. Note that the depreciation amount of 624.00 shown for year 3, month 7 includes the current period depreciation expense of 272.00 plus the catchup depreciation.

The following table shows depreciation information for year one:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	666.67	666.67	20,000.00
2	20,000.00	666.67	1,333.33	20,000.00
3	20,000.00	666.67	2,000.00	20,000.00
4	20,000.00	666.67	2,666.67	20,000.00
5	20,000.00	666.67	3,333.33	20,000.00
6	20,000.00	666.67	4,000.00	20,000.00
7	20,000.00	666.67	4,666.67	20,000.00
8	20,000.00	666.67	5,333.33	20,000.00
9	20,000.00	666.67	6,000.00	20,000.00
10	20,000.00	666.67	6,666.67	20,000.00
11	20,000.00	666.67	7,333.33	20,000.00
12	20,000.00	666.67	8,000.00	20,000.00

The following table shows depreciation information for year two:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	400.00	8,400.00	12,000.00
2	20,000.00	400.00	8,800.00	12,000.00
3	20,000.00	400.00	9,200.00	12,000.00
4	20,000.00	400.00	9,600.00	12,000.00
5	20,000.00	400.00	10,000.00	12,000.00
6	20,000.00	400.00	10,400.00	12,000.00
7	20,000.00	400.00	10,800.00	12,000.00
8	20,000.00	400.00	11,200.00	12,000.00
9	20,000.00	400.00	11,600.00	12,000.00
10	20,000.00	400.00	12,000.00	12,000.00
11	20,000.00	400.00	12,400.00	12,000.00
12	20,000.00	400.00	12,800.00	12,000.00

The following table shows depreciation information for year three:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	333.33	13,133.33	20,000.00
2	20,000.00	333.33	13,466.67	20,000.00
3	20,000.00	333.33	13,800.00	20,000.00
4	20,000.00	333.33	14,133.33	20,000.00
5	20,000.00	333.33	14,466.67	20,000.00
6	20,000.00	333.33	14,800.00	20,000.00
7	12,000.00	624.00	15,424.00	16,320.00
8	12,000.00	272.00	15,696.00	16,320.00
9	12,000.00	272.00	15,968.00	16,320.00
10	12,000.00	272.00	16,240.00	16,320.00
11	12,000.00	80.00	16,320.00	16,320.00
12

Example: Current Dated Negative Cost Adjustment: Polish Adjustment Calculation Basis Unchecked

In the following example:

Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.

In this example, the negative adjustment from 20,000.00 to 12,000.00 occurs in year 2, month 8. The new depreciation basis is 7,200.00.

The following table shows depreciation information for year one:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	666.67	666.67	20,000.00
2	20,000.00	666.67	1,333.33	20,000.00
3	20,000.00	666.67	2,000.00	20,000.00
4	20,000.00	666.67	2,666.67	20,000.00
5	20,000.00	666.67	3,333.33	20,000.00
6	20,000.00	666.67	4,000.00	20,000.00
7	20,000.00	666.67	4,666.67	20,000.00
8	20,000.00	666.67	5,333.33	20,000.00
9	20,000.00	666.67	6,000.00	20,000.00
10	20,000.00	666.67	6,666.67	20,000.00
11	20,000.00	666.67	7,333.33	20,000.00
12	20,000.00	666.67	8,000.00	20,000.00

The following table shows depreciation information for year two:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	400.00	8,400.00	12,000.00
2	20,000.00	400.00	8,800.00	12,000.00
3	20,000.00	400.00	9,200.00	12,000.00
4	20,000.00	400.00	9,600.00	12,000.00
5	20,000.00	400.00	10,000.00	12,000.00
6	20,000.00	400.00	10,400.00	12,000.00
7	20,000.00	400.00	10,800.00	12,000.00
8	12,000.00	240.00	11,040.00	7,200.00
9	12,000.00	240.00	11,280.00	7,200.00
10	12,000.00	240.00	11,520.00	7,200.00
11	12,000.00	240.00	11,760.00	7,200.00
12	12,000.00	240.00	12,000.00	7,200.00

Example: Back Dated Negative Cost Adjustment: Polish Adjustment Calculation Basis Unchecked

In the following example:

Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.

In this example, the negative adjustment from 20,000.00 to 12,000.00 occurs in year 3, month 7, but is back dated to year 2, month 8. The negative 2,800.00 shown as the depreciation amount in year 3 month 7 is the amount of excess depreciation expense and reserve that is backed out.

The following table shows depreciation information for year one:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	666.67	666.67	20,000.00
2	20,000.00	666.67	1,333.33	20,000.00
3	20,000.00	666.67	2,000.00	20,000.00
4	20,000.00	666.67	2,666.67	20,000.00
5	20,000.00	666.67	3,333.33	20,000.00
6	20,000.00	666.67	4,000.00	20,000.00
7	20,000.00	666.67	4,666.67	20,000.00
8	20,000.00	666.67	5,333.33	20,000.00
9	20,000.00	666.67	6,000.00	20,000.00
10	20,000.00	666.67	6,666.67	20,000.00
11	20,000.00	666.67	7,333.33	20,000.00
12	20,000.00	666.67	8,000.00	20,000.00

The following table shows depreciation information for year two:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	400.00	8,400.00	12,000.00
2	20,000.00	400.00	8,800.00	12,000.00
3	20,000.00	400.00	9,200.00	12,000.00
4	20,000.00	400.00	9,600.00	12,000.00
5	20,000.00	400.00	10,000.00	12,000.00
6	20,000.00	400.00	10,400.00	12,000.00
7	20,000.00	400.00	10,800.00	12,000.00
8	20,000.00	400.00	11,200.00	12,000.00
9	20,000.00	400.00	11,600.00	12,000.00
10	20,000.00	400.00	12,000.00	12,000.00
11	20,000.00	400.00	12,400.00	12,000.00
12	20,000.00	400.00	12,800.00	12,000.00

The following table shows depreciation information for year three:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	20,000.00	333.33	13,133.33	20,000.00
2	20,000.00	333.33	13,466.67	20,000.00
3	20,000.00	333.33	13,800.00	20,000.00
4	20,000.00	333.33	14,133.33	20,000.00
5	20,000.00	333.33	14,466.67	20,000.00
6	20,000.00	333.33	14,800.00	20,000.00
7	12,000.00	(2800.00)	12,000.00	7,200.00

Positive Cost Adjustments

A positive cost adjustment occurs when the cost of an asset is increased from the current cost.

Example: Current Dated Positive Cost Adjustment

In the following example:

Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.

In this example, the positive cost adjustment from 10,000.00 to 20,000.00 occurs in year 3, month 7.

Note: In this example, although depreciation is shown only through year 3, it should be assumed that depreciation will continue until the asset is fully reserved.

The following table shows depreciation information for year one:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	10,000.00	333.33	333.33	10,000.00
2	10,000.00	333.33	666.67	10,000.00
3	10,000.00	333.33	1,000.00	10,000.00
4	10,000.00	333.33	1,333.33	10,000.00
5	10,000.00	333.33	1,666.67	10,000.00
6	10,000.00	333.33	2,000.00	10,000.00
7	10,000.00	333.33	2,333.33	10,000.00
8	10,000.00	333.33	2,666.67	10,000.00
9	10,000.00	333.33	3,000.00	10,000.00
10	10,000.00	333.33	3,333.33	10,000.00
11	10,000.00	333.33	3,666.67	10,000.00
12	10,000.00	333.33	4,000.00	10,000.00

The following table shows depreciation information for year two:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	10,000.00	200.00	4,200.00	6,000.00
2	10,000.00	200.00	4,400.00	6,000.00
3	10,000.00	200.00	4,600.00	6,000.00
4	10,000.00	200.00	4,800.00	6,000.00
5	10,000.00	200.00	5,000.00	6,000.00
6	10,000.00	200.00	5,200.00	6,000.00
7	10,000.00	200.00	5,400.00	6,000.00
8	10,000.00	200.00	5,600.00	6,000.00
9	10,000.00	200.00	5,800.00	6,000.00
10	10,000.00	200.00	6,000.00	6,000.00
11	10,000.00	200.00	6,200.00	6,000.00
12	10,000.00	200.00	6,400.00	6,000.00

The following table shows depreciation information for year three:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	10,000.00	166.67	6,566.67	10,000.00
2	10,000.00	166.67	6,733.33	10,000.00
3	10,000.00	166.67	6,900.00	10,000.00
4	10,000.00	166.67	7,066.67	10,000.00
5	10,000.00	166.67	7,233.33	10,000.00
6	10,000.00	166.67	7,400.00	10,000.00
7	20,000.00	333.33	7,733.33	20,000.00
8	20,000.00	333.33	8,066.67	20,000.00
9	20,000.00	333.33	8,400.00	20,000.00
10	20,000.00	333.33	8,733.33	20,000.00
11	20,000.00	333.33	9,066.67	20,000.00
12	20,000.00	333.33	9,400.00	20,000.00

Example: Back Dated Positive Cost Adjustment

In the following example:

Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.

In this example, the positive cost adjustment from 10,000.00 to 20,000.00 occurs in year 3, month 7, with an effect beginning year 2, month 7. Note that the depreciation amount of 1,333.33 shown for year 3, month 7 includes the current period depreciation expense of 333.33 plus the catchup depreciation. The amount of catchup depreciation between year 2, month 7 and year 3, month 2 is 1,000.00.

Note: In this example, although depreciation is shown only through year 3, it should be assumed that depreciation will continue until the asset is fully reserved.

The following table shows depreciation information for year one:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	10,000.00	333.33	333.33	10,000.00
2	10,000.00	333.33	666.67	10,000.00
3	10,000.00	333.33	1,000.00	10,000.00
4	10,000.00	333.33	1,333.33	10,000.00
5	10,000.00	333.33	1,666.67	10,000.00
6	10,000.00	333.33	2,000.00	10,000.00
7	10,000.00	333.33	2,333.33	10,000.00
8	10,000.00	333.33	2,666.67	10,000.00
9	10,000.00	333.33	3,000.00	10,000.00
10	10,000.00	333.33	3,333.33	10,000.00
11	10,000.00	333.33	3,666.67	10,000.00
12	10,000.00	333.33	4,000.00	10,000.00

The following table shows depreciation information for year two:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	10,000.00	200.00	4,200.00	6,000.00
2	10,000.00	200.00	4,400.00	6,000.00
3	10,000.00	200.00	4,600.00	6,000.00
4	10,000.00	200.00	4,800.00	6,000.00
5	10,000.00	200.00	5,000.00	6,000.00
6	10,000.00	200.00	5,200.00	6,000.00
7	10,000.00	200.00	5,400.00	6,000.00
8	10,000.00	200.00	5,600.00	6,000.00
9	10,000.00	200.00	5,800.00	6,000.00
10	10,000.00	200.00	6,000.00	6,000.00
11	10,000.00	200.00	6,200.00	6,000.00
12	10,000.00	200.00	6,400.00	6,000.00

The following table shows depreciation information for year three:

Month	Cost	Depreciation	Reserve	Depreciation Basis
1	10,000.00	166.67	6,566.67	10,000.00
2	10,000.00	166.67	6,733.33	10,000.00
3	10,000.00	166.67	6,900.00	10,000.00
4	10,000.00	166.67	7,066.67	10,000.00
5	10,000.00	166.67	7,233.33	10,000.00
6	10,000.00	166.67	7,400.00	10,000.00
7	20,000.00	1,333.33	8,733.33	20,000.00
8	20,000.00	333.33	9,066.67	20,000.00
9	20,000.00	333.33	9,400.00	20,000.00
10	20,000.00	333.33	9,733.33	20,000.00
11	20,000.00	333.33	10,066.67	20,000.00
12	20,000.00	333.33	10,400.00	20,000.00

Partial Retirements

Oracle Assets does not provide any special treatment for partial retirements on assets using one of the five Polish tax depreciation methods. Oracle Assets calculates the new reserve, depreciation basis and the new cost as it would for any other partial retirement transaction.

The calculation for the new basis is the same as for a negative cost adjustment in which the Polish Adjustment Calculation Basis check box is unchecked, except the adjustment amount is replaced by the partial retirement amount:

Old Basis - Old Basis * Partial Retirement Amount/Old Cost

For example, if the old cost is 20,000 and the old basis is 12,000, and the partial retirement amount is 8,000, the new basis is calculated as follows:

12,000 - 12,000 * 8,000/20,000 = 7,200

Example: Current Dated Partial Retirement

In the following example:

Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: 2
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.

In this example, the partial retirement of 8,000 occurs in year 2, month 8. The new reserve is calculated as follows:

Old Reserve + Current Period Depreciation - Old Reserve * Retirement Amount/Old Cost

The following table shows depreciation information for year one:

Month	Cost	Depreciation	Reserve	Depreciation Basis	Method
1	20,000.00	666.67	666.67	20,000.00	SD
2	20,000.00	666.67	1,333.33	20,000.00	SD
3	20,000.00	666.67	2,000.00	20,000.00	SD
4	20,000.00	666.67	2,666.67	20,000.00	SD
5	20,000.00	666.67	3,333.33	20,000.00	SD
6	20,000.00	666.67	4,000.00	20,000.00	SD
7	20,000.00	666.67	4,666.67	20,000.00	SD
8	20,000.00	666.67	5,333.33	20,000.00	SD
9	20,000.00	666.67	6,000.00	20,000.00	SD
10	20,000.00	666.67	6,666.67	20,000.00	SD
11	20,000.00	666.67	7,333.33	20,000.00	SD
12	20,000.00	666.67	8,000.00	20,000.00	SD

The following table shows depreciation information for year two:

Month	Cost	Depreciation	Reserve	Depreciation Basis	Method
1	20,000.00	400.00	8,400.00	12,000.00	SD
2	20,000.00	400.00	8,800.00	12,000.00	SD
3	20,000.00	400.00	9,200.00	12,000.00	SD
4	20,000.00	400.00	9,600.00	12,000.00	SD
5	20,000.00	400.00	10,000.00	12,000.00	SD
6	20,000.00	400.00	10,400.00	12,000.00	SD
7	20,000.00	400.00	10,800.00	12,000.00	SD
8	12,000.00	240.00	6,720.00	7,200.00	SD
9	12,000.00	240.00	6,960.00	7,200.00	SD
10	12,000.00	240.00	7,200.00	7,200.00	SD
11	12,000.00	240.00	7,440.00	7,200.00	SD
12	12,000.00	240.00	7,680.00	7,200.00	SD

The following table shows depreciation information for year three:

Month	Cost	Depreciation	Reserve	Depreciation Basis	Method
1	12,000.00	200.00	7,880.00	12,000.00	FR
2	12,000.00	200.00	8,080.00	12,000.00	FR
3	12,000.00	200.00	8,280.00	12,000.00	FR
4	12,000.00	200.00	8,480.00	12,000.00	FR
5	12,000.00	200.00	8,680.00	12,000.00	FR
6	12,000.00	200.00	8,880.00	12,000.00	FR
7	12,000.00	200.00	9,080.00	12,000.00	FR
8	12,000.00	200.00	9,280.00	12,000.00	FR
9	12,000.00	200.00	9,480.00	12,000.00	FR
10	12,000.00	200.00	9,680.00	12,000.00	FR
11	12,000.00	200.00	9,880.00	12,000.00	FR
12	12,000.00	200.00	10,080.00	12,000.00	FR

Example: Back Dated Partial Retirement

In the following example:

Depreciable basis rule: Polish Standard Declining with a Switch to Flat Rate
Flat rate: 20 percent
Factor: two
In year 1, no test is performed to determine whether to switch the depreciation method. In all subsequent years, the test is performed.

In this example, the partial retirement of 8,000 occurs in year 2, month 12. Note that the depreciation amount of (400.00) shown for year 2, month 12 includes the current period depreciation expense of 240.00 plus the excess depreciation amount of 640.00 from year 2, month 8 through year 2, month 11, that was backed out.

The following table shows depreciation information for year one:

Month	Cost	Depreciation	Reserve	Depreciation Basis	Method
1	20,000.00	666.67	666.67	20,000.00	SD
2	20,000.00	666.67	1,333.33	20,000.00	SD
3	20,000.00	666.67	2,000.00	20,000.00	SD
4	20,000.00	666.67	2,666.67	20,000.00	SD
5	20,000.00	666.67	3,333.33	20,000.00	SD
6	20,000.00	666.67	4,000.00	20,000.00	SD
7	20,000.00	666.67	4,666.67	20,000.00	SD
8	20,000.00	666.67	5,333.33	20,000.00	SD
9	20,000.00	666.67	6,000.00	20,000.00	SD
10	20,000.00	666.67	6,666.67	20,000.00	SD
11	20,000.00	666.67	7,333.33	20,000.00	SD
12	20,000.00	666.67	8,000.00	20,000.00	SD

The following table shows depreciation information for year two:

Month	Cost	Depreciation	Reserve	Depreciation Basis	Method
1	20,000.00	400.00	8,400.00	12,000.00	SD
2	20,000.00	400.00	8,800.00	12,000.00	SD
3	20,000.00	400.00	9,200.00	12,000.00	SD
4	20,000.00	400.00	9,600.00	12,000.00	SD
5	20,000.00	400.00	10,000.00	12,000.00	SD
6	20,000.00	400.00	10,400.00	12,000.00	SD
7	20,000.00	400.00	10,800.00	12,000.00	SD
8	20,000.00	400.00	11,200.00	12,000.00	SD
9	20,000.00	400.00	11,600.00	12,000.00	SD
10	20,000.00	400.00	12,000.00	12,000.00	SD
11	20,000.00	400.00	12,400.00	12,000.00	SD
12	12,000.00	(400.00)	7,680.00	12,000.00	SD

The following table shows depreciation information for year three:

Month	Cost	Depreciation	Reserve	Depreciation Basis	Method
1	12,000.00	200.00	7,880.00	12,000.00	FR
2	12,000.00	200.00	8,080.00	12,000.00	FR
3	12,000.00	200.00	8,280.00	12,000.00	FR
4	12,000.00	200.00	8,480.00	12,000.00	FR
5	12,000.00	200.00	8,680.00	12,000.00	FR
6	12,000.00	200.00	8,880.00	12,000.00	FR
7	12,000.00	200.00	9,080.00	12,000.00	FR
8	12,000.00	200.00	9,280.00	12,000.00	FR
9	12,000.00	200.00	9,480.00	12,000.00	FR
10	12,000.00	200.00	9,680.00	12,000.00	FR
11	12,000.00	200.00	9,880.00	12,000.00	FR
12	12,000.00	200.00	10,080.00	12,000.00	FR

Japan Tax Reforms - FY2007

On March 30, 2007, the Japan Tax Reform act was published by the Ministry of Finance Japan and was enacted on April 1, 2007. The reform significantly impacted the methods used for depreciation of assets in Japan and provided new guidelines on the calculation and treatment of depreciation of assets. The purpose of the new deprecation rules laid down in the FY2007 Tax Reforms is to increase the Depreciation expenses by abolishing salvage value and increasing the depreciation limit on assets so that the companies can reduce National and Local taxes. Additionally, new depreciation methods were introduced and extended depreciation feature made available for assets acquired before April 1, 2007. In order to address the Japanese depreciation requirements, the following Japan specific depreciation methods have been created and seeded within Oracle Assets.

Method	Method Type	Calculation Basis	Depreciable Basis Rule
JP-STL XXYR	Flat Rate	Cost	FLAT RATE EXTENSION
JP-DB XXYR	Flat Rate	NBV	FLAT RATE EXTENSION
JP-250DB XX	Formula	NBV	DUAL RATE EVALUATION (Guarantee Rate Evaluation method)
JP-200DB XX	Formula	NBV	DUAL RATE EVALUATION (Guarantee Rate Evaluation method)
JP-STL-EXTND	Calculated	Cost	Straight Line Method

This section covers the following topics:

Japanese Straight Line Depreciation Method

As a result of the reform, new Straight Line depreciation rates were published for assets acquired on or after April 1, 2007. The Straight Line depreciation rate calculation for assets acquired prior to April 1, 2007 used rates rounded downward rather than upward as required by the new reform. As a result, the existing seeded JP-STL XXYR depreciation methods were modified. For depreciation terms where the rate calculation required by the reform impacted the rate, an additional rate line was added to the depreciation method. For depreciation methods where there was not an impact, the method continues to contain a single rate line. For example, in the JP-STL depreciation methods for assets with a life of four or five years the change in the rounding did not impact the rate, therefore, only one rate line is defined. Whereas in JP-STL deprecation methods for asset with lives of three to six, there was an impact on the rate, so an additional rate line was added. The method contains one rate that can be used for assets with a DPIS of prior to April 1, 2007 with another for assets with a DPIS on or after April 1, 2007.

Japanese 250 (or 200%) Declining Balance Depreciation Method

As part of the reform, the Japan government published a new 250 (or 200%) Declining Balance Depreciation Method which can be used on assets acquired on or after April 1, 2007 (200% Declining Balance Depreciation Method after April 1, 2012). For this method, the rate applied for depreciation is an accelerated balance method which is 250 (or 200%) of the rates used under the straight line method or more commonly known as 250DB (or 200DB). The method comes with an added feature of a straight-line switch. As a result, a new Guarantee Rate Evaluation Method check box was introduced to the Depreciation Method window to support the new 250DB (or 200DB)method. This option enables five new variables to be available in defining depreciation formulas within the window.

The rates provided under this method are the basic 250DB (or 200DB) rates, the guarantee rates and revised rates. The 250% (or 200%) DB Depreciation methods, as specified by the Japan government, are seeded as JP-250DB XX (and JP-200DB XX) depreciation methods in Oracle Assets with one depreciation method for each possible asset life year.

The following table describes the JP-250DB (or JP-200DB) depreciation methods:

Field Name	Value
Method	JP-250DB XX or JP-200DB XX
Description	Japan 250 or 200 Declining Balance XX years
Method Type	Formula
Calculation Basis	NBV
Depreciable Basis Rule	Dual Rate Evaluation
Depreciate in Year Retired	Yes
Exclude Salvage Value	Yes
Straight Line Method	No
Polish Adjustment Calculation Basis	No
Guarantee Rate Evaluation Method	Yes
Use Japan NBV Calculation for Impairments	Yes
Life Years	XX Years
Months	0
Formula	Decode(Sign(Floor(<Cost> * <Guarantee Rate>) – Floor(<NBV at beginning of year> *< Original Rate>)),1,<Revised Rate>, <Original Rate>)

Dual Rate Evaluation Depreciable Basis Rule

The Dual Rate Evaluation depreciable basis rule is part of the predefined rules. This depreciable basis rule determines the basis for the calculation of depreciation. The rule checks the rate that is used for calculating depreciation and accordingly determines the depreciable basis. This depreciable basis rule is available only if the FA: Japan 2007 Tax Reforms Features profile option is set to Yes.

The Dual Rate Evaluation depreciable basis rule is available only for depreciation methods that satisfy both of the following conditions:

Depreciation method must be a Formula based method.
The Guarantee Rate Evaluation Method check box is selected for the depreciation method.

The formula that is specified in the Formula field of the depreciation method determines which rate is used for the calculation of depreciation. When the Original rate is used, the depreciation calculation basis is the net book value at the beginning of the fiscal year for the asset. When the Revised rate is used, the basis of depreciation calculation is the NBV of the asset as at the date of the switch from Original rate to the Revised rate.

The following changes have been made for Formula Based methods to support the Japan Tax Reforms:

Variables for Depreciation Formula

Five additional variables were added to the list of variables on the Depreciation Formula window. These variables are used in the formula for the predefined 250% (or 200%) Declining Balance Depreciation (JP-250DB or JP-200DB) methods and are available only for those formula-based depreciation methods that have the Guarantee Rate Evaluation Method check box selected.

The following table describes the new variables on the Depreciation Formula window for the formula-based methods:

Variable Name	Purpose
Cost	The original cost of the asset.
NBV at Beginning of Year	The net book value of the asset at the beginning of the first period of the fiscal year.
Original Rate	The original rate of depreciation is specified in the Original Rate field on the Rate Details window.
Revised Rate	The revised rate of depreciation is specified in the Revised Rate field on the Rate Details window.
Guarantee Rate	The guarantee rate is specified in the Guarantee Rate field on the Rate Details window.

The Rate Details Window is available for Formula Based depreciation methods. Use the Rate Details window to enter the Original Rate, Revised Rate and Guarantee Rate of depreciation for Formula Based Depreciation methods that have the Guarantee Rate Evaluation Method check box selected.

To accommodate the above variables, the system displays Cost and NBV at Beginning of Year parameters in the Test Formula tabbed region of Depreciation Formula window. In order to have access to these parameters, the FA: Japan 2007 Tax Reforms Features profile option must be set to Yes.

Example for JP-250DB depreciation method

Assumptions:

Asset added on: April 1st, 2007
Depreciation method = JP250DB 3
Life of asset = 3 Years
Asset cost = 1000 Yen
Original Rate = 0.833
Guarantee Rate = 0.02789
Revised Rate = 1.00

Year 1

Depreciation Calculation:

Rate to be used =

= Decode (Sign (Floor (<Cost> * <Guarantee Rate>) - Floor (<NBV at beginning of year> * < Original Rate>)),1,<Revised Rate>, <Original Rate>)

= 27 - 833

= -806

Therefore depreciation rate for the first year is the Original rate.

Rate = 0.833

Thus, depreciation for the first year is as follows:

Year 1 = NBV * Original Rate

= 1000 * 0.833

= 833

Year 2

Depreciation Calculation:

= Decode (Sign(Floor(<Cost> * <Guarantee Rate>) - Floor(<NBV at beginning of year> * < Original Rate>)),1,<Revised Rate>, <Original Rate>)

= Decode (sign(1000 * 0.02789)-((1000 - 833)* 0.833)),1,Revised Rate, Original Rate)

= 27 - 139

= -112

Therefore, depreciation method for the second year is the Original rate.

Rate = .833

Thus, depreciation for the second year is as follows:

Year 2 = NBV * Original Rate

= 167 * 0.833

= 139

Year 3

Depreciation Calculation:

Rate to be used =

= Decode (Sign(Floor(<Cost> * <Guarantee Rate>) - Floor(<NBV at beginning of year> * < Original Rate>)),1,<Revised Rate>, <Original Rate>)

= Decode (sign(floor(1000 * 0.02789)-((1000 - 833- 139) * 0.833)),1,Revised Rate, Original Rate)

= 27 - 23

= 4

Therefore, depreciation method for the second year is the Revised rate.

Rate = 1.00

Thus, depreciation for the second year is as follows:

Year 3 = NBV at time of switch * Revised Rate

= 28 * 1.00

= 28

Japanese Straight Line Extended Depreciation

The reform provided an extended depreciation benefit to assets acquired before April 1, 2007 which have already reached the earlier depreciation limit of 95%. Under this benefit, these assets could now be depreciated further to 1 Yen using the Straight Line method over a 60 month period. Through the Find Eligible Assets window, you can search for the eligible assets and then use the Set Extended Depreciation window to record the decision whether or not a particular asset should be avail for extended depreciation. Once the decision is recorded on the asset and then you click on the Submit button of Set Extended Depreciation window, a concurrent process is launched to update the depreciation method to JP-STL-EXTND and depreciation limit is set to 1 Yen.

The new straight line depreciation method (JP-STL-EXTND) has been seeded in Oracle Assets in support of the extended depreciation benefit. This new method is used for all assets for which the extended depreciation decision has been set to Yes.

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The following table describes the fields related to JP-STL-EXTND depreciation method:

Field Name	Value
Method	JP-STL-EXTND
Description	Japan STL Method for Extended Depreciation
Method Type	Calculated
Calculation Basis	Cost
Depreciable Basis Rule	N/A
Depreciate in Year Retired	Yes
Exclude Salvage Value	Yes
Straight Line Method	Yes
Polish Adjustment Calculation Basis	No
Guarantee Rate Evaluation Method	No
Use Japan NBV Calculation for Impairments	Yes
Life Years	5 Years
Months	0
Formula	N/A

Windows, Window Tabs, and Menu Items Specific to Japan Tax Reforms

The following are available windows, window tabs, and menu items that support Japan Tax Reforms feature:

Rate Details Window

The Rate Details window is accessed through the Depreciation Methods window and is only available when the Guarantee Rate Evaluation Method check box is selected on the Depreciation Methods window. This window was added in support of the new 250DB depreciation methods and is only available for Formula Based depreciation methods. The window is used to capture the Original Rate, Revised Rate and Guarantee Rate of depreciation.

The Guarantee Rate Evaluation Method check box is applicable only for seeded methods and cannot be used for defining new depreciation rules.

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Extended Depreciation Menu Option

The system adds the Extended Depreciation menu option to the Depreciation menu if the FA: Japan 2007 Tax Reforms Features profile option is set to Yes. The Extended Depreciation menu provides access to the following:

Find Eligible Assets Window

In order to be eligible for extended depreciation, an asset should satisfy the following criteria:

Acquired on or before 31st March 2007
Fully reserved as of the date of inquiry

Use the Search By region of Find Eligible Assets window to search for assets eligible for extended depreciation. Navigate to the Depreciation Menu then to the Extended Depreciation menu option; the Find Eligible window is displayed.

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Enter in at least one search criteria for the assets.

The Date in Service is defaulted to a high range of March 31, 2007.

Extended Depreciation Decision Status - Default: Decision not taken.

Decision not taken: This option results in query results that show all the eligible assets that are being evaluated for Extended depreciation for the first time.
Decision deferred: This option results in the query results that show all assets for which the user has set the Extended Depreciation decision to Deferred.
Decision to avail: This option results in the query results that show all assets for which the user has set the Extended Depreciation decision to Yes and excludes those assets which have finished availing extended depreciation.
Decision to not avail. This option results in query results that show all assets for which the user has set the Extended depreciation decision to No.

The Set Extended Depreciation Defaults region of Find Eligible Assets window provides access to Avail Extended Depreciation field. Use the Avail Extended Depreciation field to indicate the Extended Depreciation status to default for the assets being retrieved using the query parameters in the Search By region. Using the Set Extended Depreciation Defaults is optional.

If the Avail Extended Depreciation field is set to Yes, all assets retrieved in the Set Extended Depreciation window will have a default status of Yes in the Avail Extended Depreciation field. The first eligible period for extended depreciation will be defaulted in the First Period field for each asset.
If the Avail Extended Depreciation field is set to No, all assets retrieved in the Set Extended Depreciation window will have a default status of No in the Avail Extended Depreciation field. In this case, the first eligible period will not be defaulted in the First Period field for any asset.
If the Avail Extended Depreciation field is set to Defer, all assets retrieved in the Set Extended Depreciation window will have a default status of Defer in the Avail Extended Depreciation field. In this case, the first eligible period will not be defaulted for any asset.
If you accept the default value (null) for the Avail Extended Depreciation field, assets retrieved in the Set Extended Depreciation window will not have any default status. In this case, you need to manually choose the value for the Avail Extended Depreciation field in the Set Extended Depreciation window. Additionally, you will need to manually choose the first period from when the extended depreciation is to be availed.

In order to access the Find Eligible Assets window, set the FA: Japan 2007 Tax Reforms Features profile option to Yes.

Set Extended Depreciation Window

The Set Extended Depreciation window displays the results of the query executed using the parameters in the Find Eligible Assets window.

Use this window to record the decision of whether or not a particular asset should be available for extended depreciation

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For every asset, set the Avail Extended Depreciation field to:

Yes
No
Defer Decision

For more information about the Avail Extended Depreciation field, see Find Eligible Assets Window.

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Once you have indicated the extended depreciation decision for the assets, click the Submit button to launch the process of changing the depreciation method and depreciation limit for those assets.

The concurrent program launched, executes the following processes:

For all assets for which the Avail Extended Depreciation is set to Yes:
- Depreciation method is changed to the JP-STL Extended Depreciation method (JP-STL EXTND).
- Internal Extended Depreciation flag is set to Yes.
- Final depreciable limit is set to the value specified by the user in the Set Extended Depreciation window.
- First period from when the extended depreciation is to be expensed is stored on the asset record.
- Asset cost to be used as the basis for calculation of depreciation is set as: (Cost - Accumulated Depreciation - Final Depreciable limit).
Where the first period of depreciation is the first period of the current fiscal year, the catch-up depreciation, if any, is calculated and expensed in the current period.
For all assets where the Avail Extended Depreciation is set to No or Defer Decision, the internal Extended Depreciation flag is set accordingly.
The normal depreciation program picks up the assets selected for extended depreciation based on the First Period specified for individual assets.

In order to access the Set Extended Depreciation Window, set the FA: Japan 2007 Tax Reforms Features profile option to Yes.

What-If Analysis Window

In accordance with the Japan Tax Reforms 2007, Oracle Assets now supports calculation of What-if Projections Analysis for JP-250DB and JP-STL-EXTND depreciation methods. Also, you can use the What-If analysis for assets that are in Extended Depreciation using the JP-STL EXTND method.

In order to use the What-If Analysis for JP-250DB and JP-STL EXTND depreciation methods, set the FA: Japan 2007 Tax Reforms Features profile option toYes.

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By setting the FA: Japan 2007 Tax Reforms Features profile option to Yes, the system adds the following to the What-If Analysis window:

Calculate Extended Depreciation check box: Select the check box to indicate that extended depreciation calculations should be made in the current What-If run.
First Period field: Select the first period from which projections of extended depreciation is to be calculated for a single or group of assets. This field is enabled if the Calculate Extended Depreciation box is checked. Periods that are displayed in the First Period are first periods of the fiscal year for which extended depreciation should start for the assets selected.

Books Window - Japan Asset Additional Info Tab

The Japan Asset Additional Info tab enables users to provide additional information when migrating individual assets that are being depreciated with JP-250DB or JP-STL-EXTND depreciation method into Oracle Assets through the Books window.

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The Japan Asset Additional Info tab includes following fields:

NBV at the Time of Switch
Period When Fully Reserved
Earlier Depreciation Limit
Limit Amount
Percent
First Period of Extended Depreciation
Earlier Depreciation Method
Life Years
Months

Mass Additions Window - Japan Asset Additional Info Tab

The Japan Asset Additional Info tab enables users to provide additional information while migrating an individual asset that is being depreciated with JP-250DB or JP-STL-EXTND depreciation method into Oracle Assets through Mass Additions Window. The Japan Asset Additional Info tab includes following fields:

NBV at the Time of Switch
Period When Fully Reserved
Earlier Depreciation Limit
Limit Amount
Percent
First Period of Extended Depreciation
Earlier Depreciation Method
Life Years
Months

Asset Impairment Changes for Japan

Though Japan is one of the countries that has not fully adopted IFRS, Japan has incorporated various principles of IFRS to increase visibility and transparency of reporting one of which being Asset Impairment. Oracle Assets now addresses the requirements of impairments for Japan depreciation methods in addition to International Accounting Standards (IAS36). The Oracle Assets Impairment functionality addresses the following business requirements for Asset Impairments for Japan:

Asset Impairments

For all Japanese depreciation method assets, users are now able to perform impairments on individual assets or as a group of assets within a Cash Generating Unit. Users can assign assets to a Cash Generating Unit within Asset Workbench or through the WedADI Impairment Worksheet. This includes assets being depreciated using guarantee rate depreciation methods such as JP-250DB or JP-STL-EXTND.

Note: You can reverse any asset impairment posted in a prior period by entering a negative impairment, by manually entering the correct amount.

Non-Depreciating Assets Impairments

Japanese companies are allowed to impair non-depreciating assets such as Land, Construction in Process, and idle assets. Assets using the Japan depreciation methods, which are fully reserved or have the depreciation flag set to No, can now be included in the Impairment process.

Impairment of Assets Beyond Asset's Deprecation Limits

In Japan, depreciation limits are legislated by the tax regulation and are set to 95% of the asset cost for assets with a date place in service (DPIS) before March 31, 2007. Most Japanese companies use the same depreciation limit for accounting purposes and depreciation is calculated up to the depreciation limit. While depreciation is limited to the depreciation limit, assets may be impaired beyond the depreciation limits. For assets using the Japan depreciation methods, are not longer prevented from impairing asset which have reached their depreciation limits.

Japan Depreciation Methods Impairment Loss Calculations

The formula for calculating net book value varies with the Japan depreciation methods.

The calculations are as follows:

Net book Value

For assets acquired prior to March 31, 2007 and are being depreciated using the seeded depreciation methods of JP-STL XXYR, JP-DB XXYR, and JP-STL-EXTND, the net book value for the impairment calculation, the salvage value is not considered in the calculation.

The net book value is calculated as follows when:

NBVCurrent = Cost - Cost Adjustment + Revaluations - Accumulated Depreciation (including current period depreciation) - Accumulated Impairment - Retirements

When performing impairments on assets using the Japanese depreciation method of JP-250DB, the salvage value is considered in the net book value calculation and is as follows:

The net book value is calculated as follows when deriving the impairment loss account:

NBVCurrent = Cost - Cost Adjustment + Revaluations - Accumulated Depreciation (including current period depreciation) - Accumulated Impairment - Retirements - Salvage Value

Post Impairment Depreciation Calculations

After the impairment has been posted to the asset, the depreciation components are recalculated as detailed below for the various depreciation methods.

Depreciable Basis

Once the impairment has been posted to the asset, the asset's depreciable basis after impairment is calculated:

JP-DB, JP-250DB

Depreciable Basis = Net Book Value
JP-STL

Depreciable Basis = Net Book Value - Salvage Value
JP-STL-EXTND

Depreciable Basis = Net Book Value - Depreciation Limit (Memorandum Price)

Guarantee Rate Recalculation

For the JP-250DB depreciation method only, the guarantee rate will not change or be recalculated after the impairment posting. The rate will be recalculated at the beginning of the fiscal year as if the impairment had not taken place.

Accounting

Impairment losses are accounted for in the organization's general ledger and are reported on the income statement. The journals for recording of impairment loss, additions, depreciation, reclassification, adjustments and retirements for the Japanese depreciation methods is the same as non-Japanese depreciation methods and is addressed using the standard Oracle Assets journal process.

Revaluations

Based on asset impairment requirements in accordance with Japanese Accounting Principles, revaluation or reversal of impairments are currently not allowed or supported for assets using the Japan depreciation methods.

Application Setup

In order to perform impairments on asset's using the Japan depreciation methods, ensure that the FA: Japan 2007 Tax Reforms Features profile option is set to Yes. Then, follow the setup steps as detailed in the Application Setup for Asset Impairments section of Oracle Assets User Guide.

Processing Impairments

For details on how to create, post, and manage asset impairments, see the Asset Maintenance: Asset Impairment Business Process section of Oracle Assets User Guide.

Asset Impairment Examples

Below details the processing events and accounting for impairing asset's depreciated using the various Japan depreciation methods.

Guarantee Rate Evaluation Method (JP-250DB): NBV Basis

Using a Revised Rate (Normal Depreciation < Guarantee Amount) With Switch

On April 1, 2007, an asset was recorded into Oracle Assets with the following details:

Current Asset Data
Asset Item	Asset Information
Cost	1,000,000 Yen
DPIS	01-Apr-2007
Salvage Value	0
Limit	1 Yen
Guarantee Rate/Amount	0.05111
Guarantee Amount	(1,000,000 * .05111) or 51,110
Original Rate	31.3%
Revised Rate	.334
Depreciation Method Details	JP-250DB 8
Method Type	Formula
Depreciation Basis	NBV
Depreciation Basis Rule	Dual Rate Evaluation
Depreciate in Year Retired	No
Excluding Salvage Value	No
Straight Line Method	No
Guarantee Rate Evaluation	Yes
Impairment Loss	150,000
Impairment Date	31-Mar-2010
FA: Annual Rounding	Yes

Fiscal Year: April – March

On March 31, 2010, a professional evaluation was performed on the asset and an impairment loss was recorded on the asset.

The effect of the impairment is illustrated in the following table:

Period	Cost	Depreciation Expense	Accumulated Depreciation Expense	Asset CNBV (End of Period	Asset NNBV	Depreciable Basis	Impairment Loss	Accumulated Impairment
2008FY1	1,000,000	313,000	313,000	687,000		1,000,000
2009FY		215,031	528,031	471,969		687,000
2010FY		147,726	675,757	324,243		471,969
	Impairment				174,243		150,000
2011FY		54,438	730,295	119,705		174,243		150,000
	Switch
2012FY		39,981	770,276	79,724		119,705		150,000
2013FY		39,981	810,257	39,743		119,705		150,000
2014FY		39,742	849,999	1		1		150,000
2015FY		0	849,999	1		1		150,000

When determining the impairment loss, the current period's (March 2010) is included in the CNBV calculation.

Impairment loss calculations are as follows:

Current Net Book Value (CNBV) = Cost + Cost Adjustment - Current Period Depreciation - Accumulated Depreciation - Accumulated Impairments - Retirements

           324,243 = 1,000,000 - 12,305 - 663,452 - 0 - 0

Impairment Loss = 150,000

New Net Book Value = CNBV - Impairment Loss

           174,243 = 324,243 - 150,000

Depreciable Basis = New Net Book Value

           Depreciable Basis = 174,243

Since this impairment happen at the end of the fiscal year and depreciation for the current period is included in the impairment loss calculation, the depreciation expense is not recalculated until the next period.

Depreciation Expense for next fiscal year:

Depreciation Expense = (Depreciable Basis * Deprecation Rate)

Note: Depreciation Rate Revision: Original Rate or Revised Rate only happens at the beginning of the next fiscal year of the impairment period. The guarantee amount calculation is always based on the formula: Cost * Guarantee Rate. There is no rate change before or after the impairment.

Determine if rate revision:

Depreciable Basis * Original Rate = > Guarantee Amount (51,110)…Use Original Rate (0.313)

             174,243 * 0.313 = 54,538 > 51,110 ... 54,538

Accounting Entries:

The following accounting entries are generated to record the impairment loss:

Account Description	Debit	Credit
Impairment Expense	150,000
Accumulated Impairment		150,000

At the end of the month, the following accounting entry is booked to record the depreciation expense for March 2010:

Account Description	Debit	Credit
Depreciation Expense	12,305 *
Accumulated Depreciation		12,305

* Since the current month depreciation is considered in the CNBV calculation, depreciation is not recalculated until the following month.

Japanese Straight Line (JP-STL)

Salvage Value 10% and Depreciation Limit 95%, DPIS before March 31, 2007

On April 1, 2007, an asset was recorded into Oracle Assets with the following details:

Current Asset Data
Asset Item	Asset Information
Cost	1,000,000 Yen
DPIS	01-Apr-2005
Salvage Value	10%, 100,000
Limit	95%, 50,000
Months	-
Adjusted Rate	12.5%
Guarantee Rate	-
Guarantee Amount	-
Original Rate	-
Revised Rate	-
Depreciation Method Details	JP-STL 8YR
Method Type	Flat
Depreciation Basis	Cost
Depreciation Basis Rule	FLAT RATE EXTENSION
Depreciate in Year Retired	Yes
Excluding Salvage Value	No
Straight Line Method	No
Guarantee Rate Evaluation	No
Impairment Loss	300,000
Impairment Date	31-Mar-2010
Salvage Value after Impairment	Asset NNVB * 10%
FA: Annual Rounding	Yes

Fiscal Year: April – March

On March 31, 2010, a profession evaluation was performed on the asset and an impairment loss was recorded on the asset.

The effect of the impairment is illustrated in the following table:

Period	Cost	Depreciation Expense	Accumulated Depreciation Expense	Asset CNBV (End of Period	Asset NNBV	Depreciable Basis	Impairment Loss	Accumulated Impairment
2006FY	1,000,000	112,500	112,500	887,500		900,000
2007FY		112,500	225,000	775,000		900,000
2008FY		112,500	337,500	662,500		900,000
2009FY		112,500	450,000	550,000		900,000
2010FY		112,500	562,500	437,500		900,000
	Impairment				137,500		300,000
2011FY		15,468	577,968	122,032		123,750		300,000
2012FY		15,468	593,436	106,564		123,750		300,000
2013FY		15,468	608,904	91,096		123,750		300,000
2014FY		15,468	624,372	75,628		123,750		300,000
2015FY		15,468	639,840	60,160		123,750		300,000
2016FY		10,160	650,000	50,000		123,750		300,000

When determining the impairment loss, the current period's (March 2010) is included in the CNBV calculation.

Impairment loss calculations are as follows:

Current Net Book Value (CNBV) = Cost + Cost Adjustment - Current Period Depreciation - Accumulated Depreciation - Accumulated Impairments - Retirements

          437,500 = 1,000,000 – 9,375 – 553,125 – 0 – 0

Impairment Loss = 300,000

New Net Book Value = CNBV - Impairment Loss

           137,500 = 437,500 – 300,000

Depreciable Basis = New Net Book Value

           Depreciable Basis (Before Salvage Value Adjustment) = 137,500 – 100,000 = 37,500

           Depreciable Basis (After Salvage Value Adjustment) = 137,500 – (137,500 * 10%) = 123,750

Depreciation Expense for next fiscal year:

           Depreciation Expense = (Depreciable Basis * 12.5%) = 15,468

Accounting Entries:

The following accounting entries are generated to record the impairment loss:

Account Description	Debit	Credit
Impairment Loss Expense	300,000
Accumulated Impairment		300,000

At the end of the month, the following accounting entry is booked to record the depreciation expense for March 2010:

Account Description	Debit	Credit
Depreciation Expense	9,375 *
Accumulated Depreciation		9,375

* Since the current month depreciation is considered in the CNBV calculation, depreciation is not recalculated until the following month.

No Salvage Value or Depreciation Limit, DPIS After April 1, 2007

On April 1, 2007, an asset was recorded into Oracle Assets with the following details:

Current Asset Data
Asset Item	Asset Information
Cost	1,000,000 Yen
DPIS	01-Apr-2007
Salvage Value	0
Limit	1 Yen
Months
Adjusted Rate	12.5%
Guarantee Rate	-
Guarantee Amount	-
Original Rate	-
Revised Rate	-
Depreciation Method Details	JP-STL 8YR
Method Type	Flat
Depreciation Basis	Cost
Depreciation Basis Rule	FLAT RATE EXTENSION
Depreciate in Year Retired	Yes
Excluding Salvage Value	No
Straight Line Method	No
Guarantee Rate Evaluation	No
Impairment Loss	300,000
Impairment Date	31-Mar-2010
FA: Annual Rounding	Yes

Fiscal Year: April – Mar

On March 31, 2010, a profession evaluation was performed on the asset and an impairment loss was recorded on the asset.

The effect of the impairment is illustrated in the following table:

Period	Cost	Depreciation Expense	Accumulated Depreciation Expense	Asset CNBV (End of Period	Asset NNBV	Depreciable Basis	Impairment Loss	Accumulated Impairment
2008FY		125,000	125,000	875,000		1,000,000
2009FY		125,000	250,000	750,000		1,000,000
2010FY		125,000	375,000	625,000		1,000,000
	Impairment				325,000		300,000
2011FY		40,625	415,625	284,375		325,000		300,000
2012FY		40,625	456,250	243,750		325,000		300,000
2013FY		40,625	496,875	203,125		325,000		300,000
2014FY		40,625	537,500	162,500		325,000		300,000
2015FY		40,625	578,125	121,875		325,000		300,000
2016FY		40,625	618,750	81,250		325,000		300,000
2017FY		40,625	659,375	40,625		325,000		300,000
2018FY		40,625	699,999	1		325,000		300,000

When determining the impairment loss, the current period's (March 2010) is included in the CNBV calculation.

Impairment loss calculations are as follows:

Current Net Book Value (CNBV) = Cost + Cost Adjustment - Current Period Depreciation - Accumulated Depreciation - Accumulated Impairments - Retirements

           625,000 = 1,000,000 – 7,812 – 367,188 – 0 – 0

Impairment Loss = 300,000

New Net Book Value = CNBV - Impairment Loss

           325,000 = 625,000 – 300,000

Depreciable Basis = New Net Book Value

           Depreciable Basis = 325,000

Depreciation Expense for next fiscal year:

           Depreciation Expense = (325,000 * 0.125) = 40,625

Accounting Entries:

The following accounting entries are generated to record the impairment loss:

Account Description	Debit	Credit
Impairment Loss Expense	300,000
Accumulated Impairment		300,000

At the end of the month, the following accounting entry is booked to record the depreciation expense for March 2010:

Account Description	Debit	Credit
Depreciation Expense	7,812 *
Accumulated Depreciation		7,812

* Since the current month depreciation is considered in the CNBV calculation, depreciation is not recalculated until the following month.

Japanese Extended Depreciation Method (JP-STL-EXTND) - Impairment at the End of Fiscal Year

Prior depreciation method JP-STL 8YR, date place in service before April 1, 2007, Depreciation limit reached, converted to extended depreciation on April 1, 2007.

On April 1, 2006, an asset was recorded into Oracle Assets with the following details:

Current Asset Data
Asset Item	Asset Information
Cost	1,000,000 Yen
DPIS	01-Apr-1995
Salvage Value	10%, 100,000
Limit	95%, 50,000
Extended	JP-STL 8YR =>JP-STL-EXTND
Adjusted Rate	12.5%
Guarantee Rate	-
Guarantee Amount	-
Original Rate	-
Revised Rate	-
Depreciation Method Details	JP-STL-EXTND
Method Type	Calculated
Depreciation Basis	Cost
Depreciation Basis Rule	-
Depreciate in Year Retired	Yes
Excluding Salvage Value	Yes
Straight Line Method	Yes
Guarantee Rate Evaluation	No
Impairment Loss	30,000
Impairment Date	31-Mar-2008
Depreciation Limit	1 Yen
FA: Annual Rounding	Yes

Fiscal Year: April – March

The asset has reached its depreciation limit and is no longer depreciating. The asset's current net book value is 50,000. As a result of the 2007 tax reform, the asset's depreciation method was changed on April 1, 2007 and the remaining value is being depreciated using the Extended Straight Line Depreciation method. Then on March 31, 2008, a professional evaluation was performed on the asset and an impairment loss was recorded on the asset.

The effect of the impairment is illustrated in the following table:

Period	Cost	Depreciation Expense	Accumulated Depreciation Expense	Asset CNBV (End of Period	Asset NNBV	Depreciable Basis	Impairment Loss	Accumulated Impairment
2007FY	1,000,000	0	950,000	50,000		900,000
	Extend STL Depreciation
2008FY		9,999	959,999	40,001		49,999
	Impairment				10,001		30,000
2009FY		2,500	962,499	7,501		10,000		30,000
2010FY		2,500	964,999	5,001		10,000		30,000
2011FY		2,500	967,499	2,501		10,000		30,000
2012FY		2,500	969,999	1		10,000		30,000

When determining the impairment loss, the current period's (March 2010) is included in the CNBV calculation.

Impairment loss calculations are as follows:

Current Net Book Value (CNBV) = Cost + Cost Adjustment - Current Period Depreciation - Accumulated Depreciation - Accumulated Impairments - Retirements

           40,001 = 1,000,000 – 833 – 959,166 – 0 – 0

Impairment Loss = 30,000

New Net Book Value = CNBV - Impairment Loss

           10,001 = 40,001 – 30,000

Depreciable Basis = New Net Book Value

          Depreciable Basis = 10,001 – 1 (Memorandum Price) = 10,000

Depreciation Expense for next fiscal year:

           Depreciation Expense = (10,000 / 4) = 2,500

Accounting Entries:

The following accounting entries are generated to record the impairment loss:

Account Description	Debit	Credit
Impairment Loss Expense	30,000
Accumulated Impairment		30,000

At the end of the month, the following accounting entry is booked to record the depreciation expense for March 2010:

Account Description	Debit	Credit
Depreciation Expense	833 *
Accumulated Depreciation		833

* Since the current month depreciation is considered in the CNBV calculation, depreciation is not recalculated until the following month.

Fully Reserved Assets

Below details the processing events and accounting for impairment an asset after it has been fully reserved.

On April 1, 2000, an asset was recorded into Oracle Assets with the following details:

Current Asset Data
Asset Item	Asset Information
Cost	1,000,000 Yen
DPIS	01-Apr-2000
Salvage Value	10%, 100,000
Limit	95%, 50,000
Months	JP-STL 5YR
Adjusted Rate	20%
Guarantee Rate	-
Guarantee Amount	-
Original Rate	-
Revised Rate	-
Depreciation Method Details	JP-STL 5YR
Method Type	Flat
Depreciation Basis	Cost
Depreciation Basis Rule	Flat Rate Extension
Depreciate in Year Retired	Yes
Excluding Salvage Value	No
Straight Line Method	No
Guarantee Rate Evaluation	No
Impairment Loss	50,000
Impairment Date	31-Mar-2010
Depreciation Limit	50,000 Yen
FA: Annual Rounding	Yes

Fiscal Year: April – Mar

As of March 2005, the asset has reached its depreciation limit and is no longer depreciating. The asset's current net book value is 50,000. Then on March 31, 2010, a professional evaluation was performed on the asset and a 50,000 impairment loss was recorded on the asset.

The effect of the impairment is illustrated in the following table:

Period	Cost	Depreciation Expense	Accumulated Depreciation Expense	Asset CNBV (End of Period	Asset NNBV	Depreciable Basis	Impairment Loss	Accumulated Impairment
2010-Q1	1,000,000	0	950,000			900,000
2010-Q2		0	950,000
2010-Q3		0	950,000
2010-Q4		0	950,000	50,000
	Impairment				0		50,000
2010-Q1		0	950,000	0		0		50,000

Impairment loss calculations are as follows:

Current Net Book Value (CNBV) = Cost + Cost Adjustment - Current Period Depreciation - Accumulated Depreciation - Accumulated Impairments - Retirements

           50,000 = 1,000,000 – 0 – 950,000 – 0 – 0

Impairment Loss = 50,000

New Net Book Value = CNBV - Impairment Loss

           0 = 50,000 – 50,000

Depreciable Basis = New Net Book Value

           Depreciable Basis = 0

Since the asset had reached its depreciation limit and stopped depreciating, the current and future period depreciation expense is zero.

Depreciation Expense for next fiscal year:

           Depreciation Expense = 0

Accounting Entries:

The following accounting entries are generated to record the impairment loss:

Account Description	Debit	Credit
Impairment Loss Expense	50,000
Accumulated Impairment		50,000

At the end of the month, the following accounting entry is booked to record the depreciation expense for March 2010:

Account Description	Debit	Credit
Depreciation Expense	0 *
Accumulated Depreciation		0

* Since the current month depreciation is considered in the CNBV calculation, depreciation is not recalculated until the following month.

Non-Depreciating Assets

Below details the processing events and accounting for impairing non-depreciating assets (Depreciation Flag is set to No).

On April 1, 2000, an asset was recorded into Oracle Assets with the following details:

Current Asset Data
Asset Item	Asset Information
Cost	1,000,000 Yen
DPIS	01-Apr-2000
Salvage Value	10%, 100,000
Limit	95%, 50,000
Months	JP-STL 5YR
Adjusted Rate	20%
Guarantee Rate	-
Guarantee Amount	-
Original Rate	-
Revised Rate	-
Depreciation Method Details	JP-STL 5YR
Method Type	Flat
Depreciation Basis	Cost
Depreciation Basis Rule	Flat Rate Extension
Depreciate in Year Retired	Yes
Excluding Salvage Value	No
Straight Line Method	No
Guarantee Rate Evaluation	No
Impairment Loss	50,000
Impairment Date	31-Mar-2010
Depreciation Limit	50,000 Yen
FA: Annual Rounding	Yes

Fiscal Year: April – Mar

As of March 2004, the asset has been depreciated by 800,000 and the depreciation flag is manually set to No and is no longer depreciating. The asset's current net book value is 200,000. Then on March 31, 2010, a professional evaluation was performed on the asset and a 100,000 impairment loss was recorded on the asset.

The effect of the impairment is illustrated in the following table:

Period	Cost	Depreciation Expense	Accumulated Depreciation Expense	Asset CNBV (End of Period	Asset NNBV	Depreciable Basis	Impairment Loss	Accumulated Impairment
2000FY	1,000,000	180,000	180,000			900,000
2001FY		180,000	360,000			900,000
2002FY		180,000	540,000			900,000
2003FY		180,000	720,000			900,000
2004FY		80,000	800,000	200,000		900,000
	Impairment				0		100,000
2010-Q1		0	800,000	100,000		100,000		100,000

Impairment loss calculations are as follows:

Current Net Book Value (CNBV) = Cost + Cost Adjustment - Current Period Depreciation - Accumulated Depreciation - Accumulated Impairments - Retirements

           200,000 = 1,000,000 – 0 – 800,000 – 0 – 0

Impairment Loss = 100,000

New Net Book Value = CNBV - Impairment Loss

           100,000 = 200,000 – 100,000

Depreciable Basis = Net Book Value - Salvage Value

           0 = 100,000 – 100,000

Adjusted cost is recalculated after the posting of the impairment as:

          Adjusted Cost = New Net Book Value – Salvage Value

          0 = 100,000 – 100,000

Since the asset had reached its depreciation limit and stopped depreciating, the current and future period depreciation expense is zero.

Depreciation Expense for next fiscal year:

           Depreciation Expense = 0

Accounting Entries:

The following accounting entries are generated to record the impairment loss:

Account Description	Debit	Credit
Impairment Loss Expense	100,000
Accumulated Impairment		100,000

At the end of the month, the following accounting entry is booked to record the depreciation expense for March 2010:

Account Description	Debit	Credit
Depreciation Expense	0 *
Accumulated Depreciation		0

* Since the current month depreciation is considered in the CNBV calculation, depreciation is not recalculated until the following month.

Restarting Depreciation

On April 1, 2011, it was decided that the depreciation on the asset was to be restarted. To restart depreciation on a non-depreciating asset, perform the following:

In Asset Workbench, change the depreciation attributes as follows:

Attribute Value

Depreciation Flag Yes

Amortize Adjustment Yes

Amortization Start Date April 1, 2011
Set the Salvage Value equal to the Net Book Value after impairment multiply by salvage rate.

Attribute Value

Salvage Value 10,000 (100,000 * 10%)

Amortize Adjustment Yes

Amortization Start Date April 1, 2011

Adjusted Cost is calculated as:

Adjusted Cost = Net Book Value after impairment - Salvage Value
```
           90,000 = 100,000 - 10,000
```
Create an adjustment to change the depreciation method to the new depreciation method to be used.

Attribute Value

Depreciation Method Change JP-STL 5YR => JP-STL-2YR

Amortize Adjustment Yes

Amortization Start Date April 1, 2011

After completing these steps, depreciation will be determined using the following:

Attribute Value

Adjusted Cost 90,000

Adjusted Rate 50%

Annual Depreciation 45,000
After running depreciation for the period, the following entries will be generated to record the new depreciation expense:

Account Description Debit Credit

Depreciation Expense 45,000

Accumulated Depreciation 45,000

Japan Depreciation Adjustment for DB Method in Corporate Tax Book

According to the Japanese tax legislations, if the depreciation method is Japanese Declining Balance method, depreciation can be expensed up to the accounted (depreciated) amount in the Corporate book or depreciated amount in Tax Book.

If the depreciation amount in the Corporate book (for example, 200) is less than the tax book (for example, 400), the depreciation can be expensed up to the corporate book amount of 200 for corporate tax reporting. The case also affects the depreciation calculation for the next fiscal year, if the asset has a depreciation method of Japanese DB methods (for example, JP-DB, JP-250DB, or JP-200DB).

The Japan Depreciation Adjustment for DB Method in Corporate Tax Book concurrent program is provided to extract eligible assets and post the adjustment data.

Process Flow

Use the Japan Depreciation Adjustment for DB Method in Corporate Tax Book concurrent program to create an adjustment automatically before finally closing the tax book, if the adjustment needs to be created with Japanese DB methods for calculating depreciation properly in the next fiscal year.

Process Flow Summary:

Prerequisites
- Run Depreciation without closing Corporate Book and Tax Book in the last period of the fiscal year.
- Run this concurrent program in the last period of the fiscal year.
Preview Adjustments
- This concurrent program collects all eligible assets with Depreciation Method JP-DB, JP-250DB, JP-200DB in the selected Tax Book to process.
- This concurrent program extracts the necessary NBV information, both of corporate book and TAX book, and creates the tax adjustment amount in the Interface table.
- You can preview and check the adjustment amount by the output, which is created by this concurrent program in Preview mode.
Post Adjustments
- In Post Mode, you can specify the Preview ID, which is created in Preview mode to post all adjustments as unplanned depreciation by the unplanned API.
- Provides validation between the Preview mode and Post mode before finally posting the adjustment.
Alerts and Checks
- Between the Preview mode and Post mode, if you execute the transaction to the asset, an error is raised for that asset.
- Checks if this concurrent program should be executed after running the depreciation program without the last period of the fiscal year closing; an error is raised.
- If you run the concurrent program for other than the last period of the fiscal year, an error is raised.
Confirm and Run Depreciations
- Run depreciation without closing the Corporate and Tax Books and check if the adjustments were properly created.
- Finally, run depreciation with closing the Corporate and Tax books.

Setting Up Depreciation Ceilings

You can set up or review expense, cost, and investment tax credit (ITC) ceilings. You can associate either an expense ceiling or a cost ceiling with an asset category. If you are subject to United States tax law, you must set up depreciation ceilings for your luxury automobiles.

To set up cost, expense, or investment tax credit ceilings:

Open the Asset Ceilings window.
Choose the type of ceiling you want to set up: Cost, Expense, or ITC.
Enter a Name and Description of the ceiling
Enter the Currency for which you are defining the depreciation expense ceiling.
Enter Start and End dates for which the ceiling is effective. If you leave the End Date field blank, the ceiling is effective indefinitely.
If you are defining a depreciation Expense ceiling, enter the fiscal year of life of the asset to which the ceiling applies.
Enter a Ceiling amount:

Expense: Enter the maximum annual depreciation allowance for each year of the asset life. Oracle Assets uses the ceiling from the last year you set up for each year thereafter.

Cost: Enter the maximum recoverable cost Oracle Assets can use to calculate depreciation expense.

Investment Tax Credit: Enter the maximum cost that Oracle Assets can use to calculate ITC.
Save your work.

Related Topics

Tax Credits

Ceiling Listing

Defining Investment Tax Credit Rates

You can set up and review your Investment Tax Credit (ITC) rates and recapture rates. Oracle Assets displays the rates in ascending order by year and life. Oracle Assets automatically recaptures a portion of the investment tax credit for assets with ITC that you retire before they are fully reserved. Once you set up your rates, you can claim ITC for an asset.

To define ITC rates:

Open the Investment Tax Credit Rates window.
Enter the year the ITC rate is effective.

You must set up ITC recapture rates for all tax years for which ITC recapture applies.
Enter the life for which this ITC rate applies.
Enter the ITC Amount Rate as a percentage. The ITC Basis for an asset is the lesser of its original cost and the ITC Ceiling, if one is used.
Enter the Basis Reduction Rate as a percentage. Oracle Assets uses the basis reduction rate to reduce the recoverable cost of the asset.
Save your work.

To define ITC recapture rates:

Open the Investment Tax Credit Recapture Rates window.
Enter the Tax Year the recapture rate is effective.
Enter the Year and Month of life to which the recapture rate applies.
Enter the Year of Retirement to which the rate applies. If you retire an asset during this year of life, it is subject to this recapture rate.
Enter the recapture rate as a percentage. Oracle Assets uses this rate to determine the amount of investment tax credit to recapture upon retirement.
Save your work.

Related Topics

Assigning Tax Credits

Tax Credits

Setting Up Depreciation (ITC) Ceilings

ITC Rates Listing

Specifying Dates for Prorate Conventions

You can set up or review prorate and retirement conventions in the Prorate Conventions window.

You must initially set up all your prorate conventions from the convention period corresponding to the oldest date placed in service through the end of the current fiscal year. At the end of each fiscal year, Oracle Assets automatically sets up your prorate conventions for the next fiscal year.

Prerequisites

Set up your Oldest Date Placed in Service. See: Specifying System Controls.
Set up your fiscal years. See: Creating Fiscal Years.
Set up your depreciation and prorate calendars. See: Specifying Dates for Calendar Periods.

To specify dates for prorate conventions:

Open the Prorate Conventions window
Enter a Convention name and Description.
Enter the Fiscal Year Name for which you want to set up this convention.
Select the Depreciate When Placed in Service check box if you want to start taking depreciation in the accounting period that corresponds to the date placed in service, instead of the period that corresponds to the prorate date.

This option determines over how many periods to spread the annual depreciation amount. For assets that use a calculated (straight-line) method, Oracle Assets ignores this option and always starts taking depreciation in the accounting period that corresponds to the prorate date.
Enter date ranges and corresponding prorate dates for assets where the date placed in service is between the From Date and the To Date.

Note: Your convention must include every date in your fiscal year; otherwise, Oracle Assets cannot calculate depreciation properly.
Save your work.

Prorate Convention Listing

About Prorate and Retirement Conventions

Oracle Assets uses the prorate convention to determine how much depreciation to take in the first and last year of an asset's life, based on when you place the asset in service. Since assets can be acquired at any time in a given period, there must be a convention for determining how much depreciation to take in each instance. The prorate convention and the date placed in service determine the prorate date.

Note: For assets to depreciate properly, prorate conventions must account for every date in the fiscal year.

Oracle Assets uses the prorate date to determine the prorate period in your prorate calendar. If you retire the asset before it is fully reserved, then Oracle Assets uses the prorate date from the retirement convention to determine how much depreciation to take in the asset's last year of life.

If you retire an asset before it is fully reserved, Oracle Assets uses the retirement convention to determine how much depreciation to take in the last year of life based on the retirement date.

Important: Remember that the prorate convention, retirement convention, and depreciation method work together to produce the depreciation amounts. You must set up depreciation rates for each prorate period.

User-Defined Conventions

Oracle Assets allows you to create your own prorate conventions.

Example 1

In this example, you create a prorate convention called Half-Quarter, in which you divide each quarter into two periods. This prorate convention requires you to create a total of eight prorate periods (two per quarter):

Prorate Convention	Period	Prorate Date	# of Prorate Periods
Half-Quarter	01-JAN-1998 to 15-FEB-1998	15-FEB-1998	8
Half-Quarter	16-FEB-1998 to 31-MAR-1998	31-MAR-1998	8

Example 2

In this example, you create a prorate convention called Following Half-Year, in which the prorate date is the first day of the following period:

Prorate Convention	Period	Prorate Date	# of Prorate Periods
Following Half Year	01-JAN-1998 to 30-JUN-1998	01-JUL-1998	2
Following Half Year	01-JUL-1998 to 31-DEC-1998	01-JAN-1999	2

Example 3

In this example, you create another half-year prorate convention called Mid-Half-Year, in which the prorate date falls at the half-way point of the period:

Prorate Convention	Period	Prorate Date	# of Prorate Periods
Mid-Half Year	01-JAN-1998 to 30-JUN-1998	31-MAR-1998	2
Mid-Half Year	01-JUL-1998 to 31-DEC-1998	30-SEP-1999	2

Prorate Convention Setup Examples

Month-to-Month

Month-to-month is the most common prorate convention and calendar setup. In this scenario:

The depreciation calendar and the prorate calendar are identical: a standard 12-month calendar with each period corresponding to a different month.
An asset with a date placed in service any time in a given month will have a full month of depreciation taken for that period.

You set up your depreciation calendar on the Asset Calendars window. You enter one depreciation period for each month as follows:

Period Date

Depreciation Period 1 01-JAN - 31 JAN

Depreciation Period 2 01 FEB - 28 FEB

Depreciation Period 3 01 MAR - 31 MAR

Depreciation Period 4 01-APR - 30-APR

... ...
Next, you set up your prorate calendar. Since the prorate calendar and the depreciation calendar are the same, you can enter the same calendar name for both the depreciation calendar and the prorate calendar.
When adding an asset, choose the Current Month prorate convention on the Books window.

In this case, the prorate date is the last day of the period. For example:

Period Period Dates Prorate Date

Period 1 01-JAN - 31 JAN 31-JAN

Period 2 01 FEB - 28 FEB 28-FEB

Period 3 01 MAR - 31 MAR 31-MAR

... ... ...

Mid-Month

When you use a mid-month prorate convention, half a month of depreciation is taken in the first and last periods of an asset's life. For a mid-month prorate convention, you need to set up a prorate calendar with semi-monthly periods.

Set up your depreciation calendar with monthly periods.
Set up a prorate calendar with 24 semi-monthly periods. For example:

Period Date

Prorate Period 1 01-JAN - 15-JAN

Prorate Period 2 16-JAN - 31-JAN

Prorate Period 3 01-FEB - 15-FEB

Prorate Period 4 16-FEB - 28-FEB

... ...
Set up a prorate convention called Mid-Month with 24 semi-monthly periods.

Select the Depreciate When Placed in Service check box if you want to start taking depreciation in the accounting period that corresponds to the date placed in service, instead of the period that corresponds to the prorate date. This option determines over how many periods to spread the annual depreciation amount. For straight-line depreciating assets, Oracle Assets always starts taking depreciation in the accounting period that corresponds to the prorate date.

When adding an asset, you want to override the default prorate convention for the category and use the Mid-Month prorate convention you set up. On the Default Depreciation Rules region of the Asset Categories window, change the prorate convention to Mid-Month.

Period	Period Dates	Prorate Date
Period	Period Dates	Prorate Date
Period 1	01-JAN - 15-JAN	15-JAN
Period 2	15-JAN - 31-JAN	31-JAN
Period 3	01-FEB - 15-FEB	15-FEB
Period 4	16-FEB - 28-FEB	28-FEB
Period 5	01-MAR - 15-MAR	15-MAR
...	...	...

In this example, if an asset has a date placed in service in the first half of January (for example, 04-JAN-1998), an entire month of depreciation is taken for the period of addition. The depreciation is charged for the first prorate period, 01-JAN-1998 through 15-JAN-1998, as well as the second prorate period, 16-JAN-1998.

If the asset is retired in the first half of a depreciation period, no depreciation is taken for the last depreciation period of its life. That is, if the asset is retired one year later on 04-JAN-1999, no depreciation is taken during the depreciation period January 1999. If the asset is retired in the second half of the last depreciation period of the asset's life, half a month of depreciation is taken. For instance, if the asset is retired on 18-JAN-1998, depreciation is taken for the prorate period 01-JAN-1998 through 15-JAN-1998, but not for the prorate period 16-JAN-1998 through 31-JAN-1998.

If an asset is placed in service in the second half of January, for example, 18-JAN-1998, a half month of depreciation is taken in the period of addition (16-JAN-1998 through 31-JAN-1998).

If the asset is retired in the first half of a depreciation period, no depreciation is taken for the last depreciation period of its life. That is, if the asset is retired on 04-JAN-1999, no depreciation is taken for the depreciation period January 1999. If the asset is retired in the second half of the last depreciation period of the asset's life, a half a month of depreciation is taken. For instance, if the asset is retired on 18-JAN-1999, depreciation is taken for the prorate period 01-JAN-1999 through 15-JAN-1999, but not for the prorate period 16-JAN-1999 through 31-JAN-1999.

Daily

If you need to depreciate on a daily basis, you need to set up daily depreciation and prorate calendars (365 periods).

Set up your daily depreciation calendar as follows:

Period Date

Depreciation Period 1 01-JAN - 01 JAN

Depreciation Period 2 02-JAN - 02 JAN

Depreciation Period 3 03-JAN - 03 JAN

Depreciation Period 4 04-JAN - 04 JAN

... ...
Set up a daily prorate calendar.
On the Prorate Conventions window, set up a prorate convention called Daily with the same daily periods as the prorate calendar you set up.
When adding assets that should use this prorate convention, choose the Daily prorate convention on the Books window.

Specifying Dates for Calendar Periods

Depreciation Calculation

Defining Price Indexes

You must set up your price indexes before you can assign them to an asset category and book in the Asset Categories window. You can use one price index for several asset categories in the same or different books. Or you can have a different price index for each asset category in each depreciation book.

The Revalued Asset Retirement Report uses your price indexes to determine the revalued asset cost. It then uses this cost to calculate gains and losses for your retired assets. You can review all of the price indexes you defined by running the Price Index Listing.

If you want to actually revalue the cost of your assets in your books, you must revalue the asset or category.

To define price indexes:

Open the Price Indexes window.
Enter the name of the Index you want to define.

Tip: The name you enter appears in list of values windows which allow no more than 40 spaces. You may want to limit your name to 40 characters.
Enter the index value as a percentage.
Enter the dates that this index value is effective. If you leave the To Date blank, the index is effective indefinitely.
Save your work.

Related Topics

Setting Up Asset Categories

Revaluing Assets

Asset Management in a Highly Inflationary Economy (Revaluation)

Revalued Asset Retirements Report

Price Index Listing

Setting Up Asset Categories

Category information is common for a group of assets. Oracle Assets defaults these depreciation rules when you add an asset, to help you add assets quickly. If the default does not apply, you can override many of the defaults for an individual asset in the Asset Details or Books windows. You set up default values for each category in each book. The default depreciation rules that you set up for a category also depend upon the date placed in service ranges you specify.

Prerequisites

Set up your Category Flexfield. See: Setting Up the Asset Category Flexfield.
Set up your Account segment values and combinations. See: Defining Accounts, Oracle General Ledger User Guide.
Set up your depreciation books. See: Defining Depreciation Books.
Set up your QuickCode values. See: Entering QuickCodes.
Set up your prorate conventions. See: Specifying Dates for Prorate Conventions.
Set up your depreciation methods. See: Defining Additional Depreciation Methods.

To set up an asset category:

Open the Asset Categories window.
Enter a Category name and Description to identify the asset category you want to set up.

Tip: The concatenated name you enter appears in fields which display 20 spaces. You may want to limit your name to 20 characters.
Check Enabled if you want to use this category.
Check Capitalize if you want to charge items in this category to an asset account when you pay for them and if you want to depreciate items in this category.
Check In Physical Inventory if you want assets in this category to be included in physical inventory comparisons.
Choose Lease, Leasehold Improvement, or Non-Lease from the Category Type poplist.

You can only enter lease information in the Asset Details window if you assign the asset to a Lease category type.
Choose Owned or Leased from the Ownership poplist.
Enter the Property Type and Class to which the assets in this category usually belong.

You set up your QuickCode values for Property Type in the QuickCodes window. If you have assets in the United States, enter 1245 for personal property and 1250 for real property.
Enter general ledger accounts for the category.
Enter general ledger accounts. See: Entering General Ledger Accounts for the Category.
Enter default depreciation rules for each depreciation book for which the category is defined.
Enter default depreciation rules for each depreciation book for which the category is defined. See: Entering Default Depreciation Rules for a Category.
Save your work.

Adding an Asset Specifying Details (Detail Additions)

Adding an Asset Automatically from External Sources (Mass Additions)

Asset Setup Processes (Additions)

Asset Descriptive Details

Overview of the Mass Additions Process

Entering General Ledger Accounts for the Category

Tip: You may have to temporarily disable your cross-validation rules and allow dynamic insertion for the Account structure to be able to enter these accounts, since they may not be valid combinations.

Important: If you want to create journal entries using other segments in addition to the natural account from the combination you enter in the Asset Categories window, you must modify the default Account Generator values to fill in those segments from the category.

To enter general ledger accounts for a category:

In the Asset Categories window, enter the Book for which you want to set up this asset category.
Enter the Asset Cost account for this category and book.

Oracle Assets uses this account to reconcile asset costs to your general ledger. Oracle Assets creates journal entries for this account to reflect additions, retirements, cost changes, revaluations, transfers, reclassifications, and capitalizations.
Enter the Asset Clearing account for this category and book.

For manual asset additions and cost adjustments, Oracle Assets uses this account to reconcile your payables system and Oracle Assets.

For mass additions, it uses the complete Account combination that comes over with a mass addition line to reconcile the asset addition or cost adjustment with your payables system.
Enter the general ledger Depreciation Expense Segment to which you charge depreciation for assets in this category and book. This is the default value for the account segment of the depreciation expense account in the Assignment window.
If you have set up bonus rates, enter the Bonus Expense account. If you do not enter a value in this field, it defaults to the Depreciation Expense account.
Enter the Accumulated Depreciation account for this category and book. This account is the contra-account for the asset cost account for this category.
If you have set up bonus rates, enter the Bonus Reserve account. If you do not enter a value in this field, it defaults to the Accumulated Depreciation account.
Enter the Revaluation Reserve account for this category and book. This account is used for the change in net book value due to revaluation, if you revalue accumulated depreciation.
Enter the Revaluation Amortization account for this category and book. This account is used to amortize the revaluation reserve over the remaining life of the asset after you revalue it, if you amortize revaluation reserve.
Enter the CIP Cost account for this category and book. This account is used to reconcile CIP asset costs to your general ledger.
Enter the CIP Clearing account for this category and book if you entered a CIP Cost account.
Enter default depreciation rules for each depreciation book for which the category is defined.
Enter default depreciation rules for each depreciation book for which the category is defined. See: Entering Default Depreciation Rules for a Category.

Related Topics

Asset Accounting

Entering Default Depreciation Rules for a Category

To enter default depreciation rules for a category:

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

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

Note: Oracle Assets does not depreciate EXPENSED assets, regardless of the default value you enter in this field.
Enter the depreciation Method that you normally use for assets in this book and category:
- If you enter a life-based method, you must enter the asset Life in Years and Months. The method you enter must have the same number of periods as the prorate calendar for this book.
- If you enter a flat-rate method, you must enter default values for the Basic Rate and Adjusted Rate that you normally use to depreciate assets in this book and category. If you are defining this category for a tax book, you also can enter a Bonus Rule.
- If you enter a units of production method, you must enter the unit of measure (UOM) and production Capacity that you normally use to depreciate assets in this book and category. If you are defining this category a tax book, enter the UOM and capacity you entered for the corporate book.
Enter the bonus rule that you normally use for assets in this book and category. You can use bonus rules for corporate books and tax books, using all depreciation methods except UOM.
Enter the Prorate Convention and Retirement Convention that you normally assign to assets in this book and category.
If you chose Use Default Percent from the Salvage Value poplist in the Book Controls window for this book, you can enter a Default Salvage Value percentage for this category, book, and range of dates placed in service. See: Entering Accounting Rules for a Book and Defaulting Asset Salvage Value as a Percentage of Cost.

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

Salvage Value = Cost * Default Percentage
If you are defining this category for a tax book, optionally enter either a depreciation expense or cost ceiling.
Enter a Price Index if you want to run reports that use the revalued asset cost to calculate gains and losses.
Enter a default subcomponent life Rule you want to use to determine the default life of the subcomponent asset based on the life of the parent asset.

Choose one of the following rules:

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

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

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

Same Life: The subcomponent asset uses the same life as the parent asset. It depreciates for the same total number of periods. If the subcomponent asset is acquired after the parent asset, it depreciates beyond the end date of the parent asset life.
If you choose Same End Date for the subcomponent life rule, you also can specify a minimum life for the subcomponent asset.

If the parent asset's remaining life and the category default life are both less than the minimum life you enter, Oracle Assets uses the minimum life for the subcomponent asset. Otherwise, it uses the lesser of the parent asset's remaining life and the category default life.
Check Straight Line for Retirements if you are setting up an asset category with a 1250 property class in a tax book. Oracle Assets uses a straight-line depreciation method in determining the gain or loss resulting from the retirement of 1250 (real) property.

If you check Straight Line For Retirements, enter the straight-line depreciation Method and Life you want to use for the Gain From Disposition of 1250 Property Report. This is the default method for your asset in the Retirements window and in the tax book if you use mass copy.
Check the Use Depreciation Limit check box if you want to depreciate an asset beyond its useful life. You can enter the default depreciation limit as a percentage or an amount. See: Depreciating Assets Beyond the Useful Life.
Enter the minimum time you must hold an asset for Oracle Assets to report it as a capital gain when you retire it.

If you want Oracle Assets to report a capital gain for all assets in this category when you retire them, enter zero. If you want to report a capital gain for assets which you have held for at least one year, such as for United States federal tax form 4797, enter one in the Years field and zero in the Months field. If you need a different capital gains threshold for different dates placed in service, such as for United States federal tax form 4797, set up the asset category several times for the different date placed in service ranges.
If you are defining this category for a tax book, indicate whether assets in this category are eligible for Investment Tax Credit (ITC), and whether assets in this category Use ITC Ceilings.
Check the Mass Property Eligible check box if you want to make assets added to this category eligible for mass property treatment.
In the Group Asset field, you can enter the group asset to which all assets added to this category will be assigned. If you enter a group asset number in this field, all capitalized and CIP assets using this category will be automatically assigned to the group asset entered.
Save your work.

Related Topics

Defining Additional Depreciation Methods

Defining Units of Measure, Oracle Inventory User Guide

Defining Depreciation Bonus Rules

Defining Price Indexes

Setting Up Depreciation Ceilings