Defining Financial Processing for PeopleSoft Asset Management

Use the Asset Categories (CATEGORY_DEFN) component and the Capitalization Limits (DEPR_CAP_LIMIT) component to define financial processing in PeopleSoft Asset Management.

This topic provides an overview of financial processing, lists the pages to define financial processing and describes how to:

Define asset categories.
Set up capitalization limits.
Set up capitalization threshold processing.
Set up fair value processing.

Pages Used to Define Financial Processing

Page Name	Definition Name	Navigation	Usage
Categories	CATEGORY_DEFN	select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Categories, then select Categories	Establish asset categories, which classify assets by type for accounting entry purposes. Typically, these categories reflect how assets are reported on balance sheets. Examples of commonly used asset categories are Furniture and Fixtures, Machinery and Equipment Office Equipment, Leasehold Improvements, and so forth.
Inflation Information	CATEGORY_SEC	Click the Inflation Information link from the Category page.	Establish an inflation adjustment factor by selecting the market index and rate to apply.
Asset Categories Report	RUN_AMAS1100	select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Reports, then select Asset Categories, then select Asset Categories	Run a report on asset categories.
Cost Types	COST_TYPE_DEFN	select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Cost Types, then select Cost Types	Define cost types.
Financing Codes	FINANCING_CD	select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Financing Codes	Define financing codes to help you analyze your debit and credit relationships for capital-intensive and government projects. For example, you could set up codes to identify bonds, such as IRBs, IDBs, and TEBs.
Indexes	AM_INDEX_TBL	select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Indexes	Set up an index, which is used to remeasure assets according to set percentages. Gain and loss on retirement is then calculated by using the resulting net book value. Indexes are usually maintained by regulatory agencies, but you can set up your own as well. You can set up rates to associate with indexes on the Defining Market Rates page.
C.A.P. Types (capital acquisition plan types)	CAP_TYPE	select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Profiles, then select Capital Acquisition Plan Types	Set up C.A.P. types. If you are using Asset Budgeting, you set up codes to be used with the C.A.P. function. You can also use C.A.P. type codes to track assets acquired as part of a C.A.P.
Capitalization Limit	DEPR_CAP_LIMIT	select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Capitalization Limit	Set up capitalization limit codes by business unit by book, as necessary, especially Germany.
Capitalization Thresholds	CAP_THR_DEFN	select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Capitalization Thresholds, then select Capitalization Thresholds	Establish capitalization thresholds by asset profile to be used in automatic classification of capital asset, noncapital asset or expense asset.
Cap Threshold Validation	AM_CAPVAL_RQST	select Asset Management, then select Financials, then select Capitalization Thresholds, then select Capitalization Thresholds	Run the process to validate whether an asset still meets conditions to remain in the capitalization status that it was originally catalogued upon asset addition based on the capitalization threshold process.
Clearing Reconciliation	AM_CLEREC_RQST	select Asset Management, then select Accounting Entries, then select Clearing Reconciliation	Run the process to reconcile the clearing account that is created by trackable assets from feeder systems against the expense account.
Review Expense Entries	ASSET_NF_DIST	select Asset Management, then select Accounting Entries, then select Review Expense Entries	Run a report to show the capitalization status of assets based upon criteria selection.
Capitalization Summary Report	AM_CAPSUM_RQST	select Asset Management, then select Financial Reports, then select Capitalization Summary Report	Run a report to show the capitalization status of assets based upon criteria selection.

Understanding Financial Processing in PeopleSoft Asset Management

PeopleSoft Asset Management enables you to apply various attributes to assets for financial reporting purposes, such as categories, cost types, financing codes, and indexes. The purpose of defining these asset attributes is to help refine asset information into meaningful information blocks.

The combination of asset category and transaction code determines into which accounts an asset transaction is entered. Asset category is required.

To group assets by class for reporting or informational purposes only, use the asset class field.

Cost types represent different cost components of an asset, such as materials, labor, and overhead. For example, you can differentiate between the cost of building an asset and its market value by allocating the cost of production to one cost type and the margin of profit to another cost type. Cost type, in combination with asset category and transaction code, determines into which accounts the costs are entered in the general ledger.

Use indexes to remeasure assets according to set percentages. An index may consist of several subindexes, each of which has a separate index amount. You can set up a subindex for each asset category, with amounts that correspond to the inflation or valuation percentages for that year.

You also use indexes and subindexes to calculate replacement costs for assets. Tying an index, such as the consumer price index (CPI), to an asset profile enables replacement cost to be updated in adjustment, partial InterUnit transfer, partial retirement, and partial reinstatement transactions. Revaluation indexes are usually dictated by regulatory agencies, but you can also set up your own.

In compliance with Financial Accounting Standards (FAS) 157, which establishes U. S. guidelines for measuring the fair values of assets and liabilities, PeopleSoft Asset Management provides a framework by which to designate the appropriate valuation method for proper fair value valuation processing. Asset Management also supports fair value processing for international organizations.

PeopleSoft Asset Management validates capitalization limits when you add assets. At the business unit or book level, indicate whether validation should occur against a specific limit or against a table where you have stored step limit amounts and specified various messages for assets whose costs fall below these steps. You can also specify incremental valuation thresholds that identify the asset as a low value asset and how it should be treated during processing. The capitalization limit table accommodates the processing requirements of various countries. In some countries, a low value asset must be fully depreciated in the year of acquisition; in others, a low value asset may be added but must be taken as an expense.

PeopleSoft Asset Management can also determine capitalization status of an asset based on its cost according to capitalization thresholds that you define. When adding new assets, either online or batch, the system automatically classifies them according to their cost into capital assets, noncapital assets or expense assets. You create a Capitalization Threshold for each profile of asset that you want to evaluate and associate it with that asset profile. Processes are available to validate capitalization status and deal with adjustments to the original cost, reconcile any potential clearing account with feeder systems, and access reports and audit trails to facilitate control of these transactions.

See the topic “Capitalization Threshold” in Understanding Adding and Maintaining Assets

Categories Page

Use the Categories page (CATEGORY_DEFN) to establish asset categories, which classify assets by type for accounting entry purposes.

Typically, these categories reflect how assets are reported on balance sheets. Examples of commonly used asset categories are Furniture and Fixtures, Machinery and Equipment Office Equipment, Leasehold Improvements, and so forth.

Navigation

select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Categories

Image: Categories page

This example illustrates the fields and controls on the Categories page. You can find definitions for the fields and controls later on this page.

Complete the appropriate fields for each asset category. Identify the depreciable status as Depreciable or Non Depreciable.You can optionally associate inflation processing information with the category.

See Setting Up Asset Profiles.

Options

These options drive the accounting entries to display in the accounting entry template. When possible, assign these options at the asset category level to alleviate this identification at the individual asset level. Identification at the category or profile level is also necessary for handling batch transactions where there is no use intervention.

Intangible

Select if the asset category applies to intangible assets.

Leased Assets

Select if the asset category applies to leased assets.

Investment Property

Select if the asset category applies to assets that are considered investment property as defined by International Accounting Standards (IAS) 40. This selection can be used in conjunction with the Leased Assets check box if the category applies to leased assets that are also investment property. However, you cannot select the Intangible check box and the Investment Property check box in combination. A warning message appears in the event that you select this invalid combination.

See Defining Investment Property.

Property Interest

Select if the asset category applies to an operating lease that meets the conditions for investment property as defined by IAS 40. Operating leases that fall under this category are not treated as operating leases according to Financial Accounting Standards (FAS) 13, which are normally expensed, but rather as capital leases for accounting purposes (capitalized and amortized over the lease term). The Leased Asset check box must also be selected when selecting this option. A message alert appears upon saving the page if the Property Interest check box is selected without the selection of the Leased Assets check box.

Cost Types Page

Use the Cost Types page (COST_TYPE_DEFN) to define cost types.

Navigation

select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Cost Types, then select Cost Types

Image: Cost Types page

This example illustrates the fields and controls on the Cost Types page. You can find definitions for the fields and controls later on this page.

Impairment Process

Select to use this cost type for impairment. Selecting this check box displays impairment related accounts at the accounting entry template level. This field is not displayed if impairment options are not selected on the Installation Options - Asset Management page.

Note: This option cannot be selected with the Revaluation Process option for a single cost type.

Revaluation Process

Select to use this cost type for revaluation. Selecting this check box displays revaluation related accounts at the accounting entry template level. This field is not displayed if revaluation options are not selected on the Installation Options - Asset Management page.

Note: This option cannot be selected with the Impairment Process option for a single cost type.

Asset Retirement Obligations

Select to use this cost type for ARO (asset retirement obligation) processing. Selecting this check box displays ARO-related accounts at the accounting entry template level. This field is not displayed if ARO options are not selected on the Installation Options - Asset Management page.

Note: This option cannot be selected with the Impairment Process option or the Revaluation Process option for a single cost type.

Note: When selecting a cost type for processing, you should update the accounting entry templates because new accounting entries need to be set up for these transactions.

Capitalization Limits Page

Use the Capitalization Limits page (DEPR_CAP_LIMIT) to set up capitalization limit codes by business unit by book, as necessary, especially Germany.

Navigation

select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Capitalization Limit

Image: Capitalization Limits page

This example illustrates the fields and controls on the Capitalization Limits page. You can find definitions for the fields and controls later on this page.

Create a cost limit code, complete the applicable fields, and select the Low Value Switch check box to identify which limit amount triggers low value asset reporting. This is used only in certain countries.

For example, you might set up capitalization limits for Germany. Using the Cap Limit table, you can set up your system so that assets with a cost less than 800.00 EUR could be added, but the system would generate a warning that the cost was below the capitalization limit; likewise, assets with a cost less than 100.00 EUR could not be added and would generate an error message.

Capitalization Thresholds Page

PeopleSoft Asset Management can determine capitalization status of an asset based on its cost or quantity according to limits that you define. This can be accomplished by enabling the optional Capitalization Threshold feature. Once you enable this feature and complete the required setup, the system automatically classifies assets using the defined thresholds when adding new assets, either online or in batch: Assets are classified within one of the following categories:

Capital Assets - The system generates an asset ID and stores physical and financial information. Financial information is stored in the cost table (COST). The system also stores acquisition details. Therefore, these assets are trackable from both a physical and financial standpoint. This term is interchangeable with Financial Assets.
Noncapital Assets - The system generates an asset ID and stores only physical information. The cost information is stored in the noncapitalized cost table, (COST_NON_CAP). The system also stores acquisition details. Therefore, these assets are trackable from a physical standpoint only. This term is synonymous with Trackable Assets or Nonfinancial Assets.
Expense Assets - The system does not generate an asset ID. If an asset is entered online that does not meet the capitalization threshold, an error message appears saying that the asset has been catalogued as an expense due to its cost amount and could not be considered as an asset. If the asset is entered in batch, the system stores a message in an audit table that explains why that interface line was not processed. Because of their low cost, these assets are considered an expense when acquired and there is no interest in tracking them within the Asset Repository.

To begin using the Capitalization Threshold feature, complete the following setup steps:
1. Enable the Cap Threshold Processing option at the system level within Installation Options - Asset Management.
  
  See Installation Options - Asset Management Page.
2. Enable the Capitalization Threshold option at the business unit level.
  
  See Understanding Asset Management Business and Cash Generating Units.
3. Define Capitalization Thresholds and associate them to the appropriate asset profiles.

Use the Capitalization Thresholds page (CAP_THR_DEFN) to establish capitalization thresholds by asset profile to be used in automatic classification of capital asset, noncapital asset or expense asset.

Navigation

select Set Up Financials/Supply Chain, then select Product Related, then select Asset Management, then select Financials, then select Capitalization Thresholds, then select Capitalization Thresholds

Image: Capitalization Thresholds page

This example illustrates the fields and controls on the Capitalization Thresholds page. You can find definitions for the fields and controls later on this page.

Threshold ID

Supply a meaningful threshold ID when creating capitalization thresholds to assign them to asset profiles or assets.

Basis

Select the basis to be used for calculating the appropriate capitalization action to take. Select from the following options:

Amount: The capitalization threshold is based on the total cost of an asset (cost x quantity).
Quantity: The capitalization threshold is based on the unit costs per asset.

Currency Code

Enter the currency code of the amounts reflected in the Amount fields.

Effective Date

Enter the date when the threshold becomes applicable.

Active

Activate each threshold bracket. When deselected, the amount becomes unavailable.

Action

Select to activate and set thresholds for the following brackets:

Physical: If this action is active and an asset falls within the threshold for this bracket, the system creates the asset ID but does not capitalize it. Any asset added that has an amount above this bracket is capitalized if this bracket is active.
Expense: If this action is active and falls within the threshold for this bracket, the asset is excluded from asset generation. If however, the Physical bracket is not active and an asset amount is above the Expense limit, the asset is capitalized.

Amount

Enter the ceiling amount for each bracket. Amounts that are less than or equal to the amount entered are included in that bracket.

Capitalization Threshold Validation Page

The Capitalization Threshold Validation process validates whether assets still belong to the capitalization brackets to which they were initially catalogued after adjustments are made to the original cost. If an asset is in the same bracket as originally classified, then this process takes no further action; however, if it is not, the asset is moved to its respective capitalization bracket.

The following graphic represents the process flow for the capitalization threshold validation process:

Image: Capitalization Validation process flow

Capitalization Threshold validation process flow:

Use the Capitalization Threshold Validation page (AM_CAPVAL_RQST) to run the process to validate whether an asset still meets conditions to remain in the capitalization status that it was originally catalogued upon asset addition based on the capitalization threshold process.

Navigation

select Asset Management, then select Asset Transactions, then select Financial Transactions, then select Cap Threshold Validation

Image: Capitalization Threshold Validation page

This example illustrates the fields and controls on the Capitalization Threshold Validation page. You can find definitions for the fields and controls later on this page.

Supply the selection criteria for assets to be evaluated for capitalization threshold validation.

Chartfield Search Criteria link

Access the Chartfield Search Criteria page to supply ChartField filter information for those assets that have particular ChartFields active.

Trans Code (transaction code)

Select this criteria, which is useful for assets that are converted from trackable to capitalized. If you want to identify them or perform a different accounting entry, you can define and utilize a transaction code for that purpose.

Validation Basis

Select the criteria to use in order to evaluate the total cost of the asset against the threshold. The following options are available:

Capitalized Cost : The system sums only the amounts stored on the cost table.
Total Cost: The system sums up the amounts stored in both the cost and non capital cost tables.

Clearing Reconciliation Page

When an asset is deemed trackable by the capitalization threshold process, the asset ID is generated but in fact no accounting activities take place. Additionally, when assets are added through feeder sources, it is likely to debit the Fixed Account and credit a Clearing account that was previously debited at the source accounting. The Clearing Reconciliation process provides a way to balance out (credit) the clearing account that was previously debited at the source product accounting and debit the expense account. This is not applicable to the trackable assets that are entered directly into Asset Management with no clearing account at all. In this instance, the expense account is most likely debited when the asset is added.

This process checks the noncapital cost lines, determines the expense and clearing accounts from the accounting entry templates and inserts rows into the staging table (DIST_LN) to be loaded as journal entries into general ledger for posting.

Use the Clearing Reconciliation page (AM_CLEREC_RQST) to run the process to reconcile the clearing account that is created by trackable assets from feeder systems against the expense account.

Navigation

select Asset Management, then select Accounting Entries, then select Clearing Reconciliation

Image: Clearing Reconciliation page

This example illustrates the fields and controls on the Clearing Reconciliation page. You can find definitions for the fields and controls later on this page.

This process creates the clearing accounting entries from the noncapitalized assets that have the selected system source. For each noncapital row that matches the criteria, an entry is generated in the DIST_LN table that credit the clearing account and debit the expense account according to the accounting entry template for the EX distribution type. This distribution type is available for the ADD and ADJ accounting entry templates for those template IDs that have the capitalization threshold enabled.

See Accounting Entry Types (Distribution Types).

Capitalization Threshold Summary Report Page

Use the Capitalization Threshold Summary Report page (AM_CAPSUM_RQST) to run a report to show the capitalization status of assets based upon criteria selection.

Navigation

select Asset Management, then select Financial Reports, then select Capitalization Summary Report

Image: Capitalization Threshold Summary Report page

This example illustrates the fields and controls on the Capitalization Threshold Summary Report page. You can find definitions for the fields and controls later on this page.

Select criteria to report assets as they are classified according to the Capitalization Threshold process. The report displays the acquisition date, asset ID, description, quantity, tag number, serial ID, capitalized cost and noncapitalized cost.

Report Type

Select to report only the assets that are candidates for recategorization or select to report all assets.

Validation Basis

Select to report assets that are capitalized (from the cost table) or select to report both capital and noncapital assets.