This chapter covers the following topics:
The new Fixed Asset integration helps implementer understand in detail the total Oracle Financials for India (OFI) – India Localization & Oracle Fixed Assets (FA) integration functionality.
This document provides details of Functional flow for Oracle Financials for India (OFI) Fixed asset integration cycle from the GST point of view.
Businesses in India, under the Income Tax Act, have to compute depreciation using the Written Down Value method. The depreciation percentage is applied on the Block of Assets and no depreciation can be claimed on individual assets.
Navigate to Book Controls window using India Local Fixed Assets > Oracle Fixed Assets > Setup > Asset System > Book Controls.
Define Asset Book:
Enter details in Calendar Tab in the Book Controls window.
Enter Details in Natural Accounts Tab in the Book Controls window.
Save the details.
Assign Asset Category to the Asset Book:
Navigate to the Asset Categories using the India Local Fixed Assets > Oracle Fixed Assets > Setup > Asset System > Asset Categories.
Query the existing category with which you want to attach the asset book.
Once data is fetched, add new book to the category.
Click Default Rules option and mandatory fields.
Save the details.
Navigate to the Opening Balance of Block India Localization using the India Local Fixed Assets > India Localization > Block of Assets > Define Block of Assets.
Define Block Name:
Query by JAI_BLOCK_OF_ASSETS.
You can find the list of block of assets from the lookup.
Modify existing block of assets and you can add new block of assets that you are going to use in transaction in future.
Save the details.
Attach the block of asset to the book and define Depreciation Rates in the Depreciation region:
Enter the Book Name for which you are going to do the setup. Automatically, that will show you all the blocks attached and their depreciation rate. Oracle Financial for India supports only the Corporate book and not the Tax Book.
Insert new row for the new financial year. You cannot modify existing records. Once the opening balance for the block is entered for a financial year you cannot change it. You cannot enter the previous year balances or subsequent year balances either.
If you want to adjust an Opening Written down value of a block after an Income tax assessment is finished for a particular year, the adjustment amount can be entered in the Adjustments option and Opening Written Down Value (WDV) is adjusted accordingly.
Navigate to the Period-Wise Depreciation India Localization window using India Local Fixed Assets > India Localization > Block of Assets > Define Periodwise Dep Details.
Query for the required year start and end date.
Define the period-wise depreciation rate.
As per current statute, if the date placed in service is in the first half of the financial year, then depreciation for an asset can be claimed up to 100% of the allowable depreciation; whereas if the date placed in service is in the second half of the financial year, then depreciation for an asset can be claimed up to 50% of the allowable depreciation.
Data is retrieved if it exists. Otherwise, you can add new details. Applicable depreciation Rate for first half is 100% whereas 50% is for 2nd half.
Asset Addition
Navigate to the Assets Details window using the India Local Fixed Assets > Oracle Fixed Assets > Assets > Asset Workbench.
Enter new asset details.
Click Continue to enter the asset cost, date placed in service, and other mandatory information.
Click Continue and in the next window, enter the Expense account and Location Details.
Click Done.
Attach the asset to the Block of Assets
Select the Asset book to which you want to add the asset.
Click on New option. The assets assigned to the block are listed within the specified date range.
Select the block to which each of these assets needs to be linked.
Save the records.
India - Income Tax Act Fixed Asset Schedules Concurrent Program
Enter the Start Date as the start date to get the depreciation details.
Enter the End Date when until when the depreciation details have to be retrieved.
Select or enter the Book Name.
This report calculates closing WDV for each block at the end of the period mentioned in the report parameter. You can run the India - Income tax act fixed assets schedule program frequently, but it is recommended that you run this program once towards the year end, as this would create the opening WDV balance record of the Block of Assets for the next financial year. For calculating closing WDV, following rules are followed:
Closing WDV = (Opening WDV + Additions during the year – Deduction & Sale in the year**) – Depreciation
Depreciation Amount = (Opening WDV + Additions during the year – Deduction & Sale in the year)* depreciation rate % **
Deduction & Sale in the year = Proceeds of sale - cost of removal.
Cost Retired are not considered in Deduction & Sale in the year for calculating closing WDV. This change is in line with Section 43(6) of the Income tax Act.
Navigate to the Assets Details window using the India Local Fixed Assets > Oracle Fixed Assets > Assets > Asset Workbench.
Enter new asset details.
Click Continue to enter the asset cost, date placed in service, and other mandatory information.
Click Continue and in the next window, enter the Expense account and Location Details.
Click Done.
Attach the asset to the Block of Assets
Select the Asset book to which you want to add the asset.
Click on New option.
The assets assigned to the block are listed within the specified date range.
Select the block to which each of these assets needs to be linked.
Save the records.
India - Income Tax Act Fixed Asset Schedules Concurrent Program
Enter the Start Date as the start date to get the depreciation details.
Enter the End Date when until when the depreciation details have to be retrieved.
Select or enter the Book Name.
This report calculates closing WDV for each block at the end of the period mentioned in the report parameter. You can run the India - Income tax act fixed assets schedule program frequently, but it is recommended that you run this program once towards the year end, as this would create the opening WDV balance record of the Block of Assets for the next financial year. For calculating closing WDV, following rules are followed:
Closing WDV = (Opening WDV + Additions during the year – Deduction & Sale in the year**) – Depreciation
Depreciation Amount = (Opening WDV + Additions during the year – Deduction & Sale in the year)* depreciation rate %
** Deduction & Sale in the year = Proceeds of sale - cost of removal.
Cost Retired are not considered in Deduction & Sale in the year for calculating closing WDV. This change is in line with Section 43(6) of the Income tax Act.
Enter the Start Date as the start date to get the depreciation details.
Enter the End Date when until when the depreciation details have to be retrieved.
Select or enter the Book Name.
Select the Level of Detail the report must display. Valid values are:
Detail
Summary
This report provides information on depreciation calculated for each asset. Closing WDV are mentioned as per calculation happened in India - Income Tax Act Fixed Asset Schedules Concurrent Program.
Adding a new Asset during first half of the fiscal year Addition during Second Half of the financial year.
Once assets is assigned to the Block, the next step would be to run the below two concurrent, India - Income Tax Act Fixed Asset Schedules.
The TESTING 3 asset is added with a Date placed in service as 30th April 2002 and the cost of the asset is 20000. The depreciation rates for the block TEST is 20%. So the depreciation amount for the Asset TESTING 3 will be 20000 * 20% = 4000
The TESTING 4 asset is added with a Date placed in service of 31st Oct 2002 and the cost of the asset is 40000. The depreciation rate for the block is 20%. Since the asset is added in the second half of the fiscal year only 50% of the depreciation rate is charged. So depreciation amount is = (40000 * (20%/2)) = 4000.
The abstract of India - Income Tax Act Fixed Asset Schedules output.
Run the India - Depreciation detail report
The report abstract is as follows:
You can see in the Block assignment window, closing balance is updated for the current fiscal year and a row is inserted for the next fiscal year with the opening balance as the closing balance of last financial year
Whenever business incurs any additional expense for asset, that expense amount can be added to the asset cost and in base FA this is called 'cost adjustment'. When a cost adjustment transaction is performed in base FA, the same cost will get reflected even in OFI forms as well as Reports.
For example, initially asset was created with a cost of 20000. So the 'India - Income Tax Act Fixed Asset Schedules' report will show 20000 as cost. Later an additional cost adjustment of 10000 was done on the same asset. So now the report will show the cost as 30000 and even depreciation will be calculated on this cost. Same will be the case with 'India - Depreciation detail report'.
Retiring an Asset
To retire the asset the navigation is Oracle Fixed Assets > Assets > Asset work bench > Retirement.
Enter the values in retirement date, cost retired, pro and cost to be retired, proceeds of sale etc. and save the transaction
Then run the calculate gain and loss program.
The next step would be to run the India - Income Tax Act Fixed Asset Schedules:
The abstract of report will be as follows:
Opening WDV for the block Car is = 95000
Deduction & sale = 500 which is entered as proceeds of sale while retiring the asset
Total is = Opening WDV - Deduction & sale i.e. 95000-500 = 94500
Depreciation During the year = (Opening WDV - Deduction & sale)*10%=9450
Closing WDV = Opening WDV- Deduction & sale – Depreciation = 95000-(500+9450) = 85050
India - Depreciation detail report:
The abstract of report will be as follows
Opening WDV for the block Car is = 95000
Deduction & sale = 10000 which is entered as cost of retired while retiring the asset. The amount which is entered as proceeds of sale during retirement i.e. 500 will also appear under Deduction & sale column. However it will not be considered in total
Total is = Opening WDV - Deduction & sale i.e. 95000-10000 = 85000
Depreciation During the year = (Opening WDV - Deduction & sale)*10%=8500
*Closing WDV = Opening WDV- Deduction & sale – Depreciation = 95000-(500+9450) = 85050
*Closing WDV updated here will as it is calculated in India - Income Tax Act Fixed Asset Schedules report.
During migration of assets from Legacy system to oracle Application, the recommended way to migrate or like the assets to the block of assets is to:
Define the blocks or financial year starting from the oldest date placed in service of the asset which you have to migrate.
Then link the assets based on its date placed in service for each year and then run the localization reports.
For example, if the assets are added right from the year 1980, then:
First define the Block of Assets for the financial year 1980.
Assign all the assets which have DPIS of 1980 to the block of assets in India block of Assets window.
Run the program India Income Tax Act Fixed Assets Schedule for the year 1980.
This calculates the localization depreciation for the block of assets and arrives at the closing balance for the year 1980. It also creates another record in the Block of Assets window for the year 1981 gives the opening balance equal to the Closing Balance of the year 1980. You can then upload all the assets falling in the year 1981 and then run the India Income Tax Act Fixed Assets Schedule report.
Note: Repeat the steps for all the fiscal years until you reach the current financial year.
The steps involved in Procure to Pay cycle for Capital Goods are:
Create a purchase order (PO) to buy a capital item with Non Recoverable GST taxes applied on it.
Create a receipt for the PO
Create an ERS invoice.
Validate the AP invoice.
Create accounting and transfer accounting to GL.
Run the Mass Additions create program. This interfaces all the third party invoice details and amounts that have CGIN Item.
Run India Mass addition Create program to interface the non-recoverable taxes to Fixed assets.
From the FA super user responsibility, create an Asset by changing the status to POST and entering the required information.
Run the Post Mass Addition Program that creates the asset and non-recoverable tax amounts and adds to asset cost.