This section contains details of the suggested accounting entries that can be set up, for the Islamic Fixed Asset module of Oracle FLEXCUBE. The details of the suggested accounting entries are listed event-wise.
This chapter contains the following sections:
The following is an exhaustive list of events that can take place during the lifecycle of a contract. In the subsequent paragraphs we shall examine the accounting entries and advices for each of the events listed below.
Event Code |
Event Description |
Remarks |
BOOK |
Booking an Islamic Fixed Asset contract (Mandatory) |
All Types |
CAPT |
Capitalization of an asset |
All Types |
DEPR |
Depreciation Processing for Booking |
All Types |
AMND |
Amendment of a contract |
All Types |
SALE |
Sale of an asset |
All Types |
WROF |
Islamic Fixed Asset Write off |
All Types |
DPTX |
Depreciation for Tax purposes (no accounting entries are passed for this event) |
All Types |
REVC |
Reversal of a contract |
All Types |
TSFR |
Transfer of Asset |
|
DEAW |
Depreciation Wash |
|
DEWR |
Depreciation Wash Reversal |
|
The amount tags listed below are hard-coded in Oracle FLEXCUBE.
Amount Tag |
Description |
FA_CAPT_AMT |
Asset Cost Capitalized |
FA_DEPR_ACC |
Accumulated depreciation |
FA_DEPR_ADD |
Additional depreciation to be charged |
FA_DEPR_RED |
Reduction in depreciation amount already charged |
FA_SALE_AMT |
Net Sale Value |
FA_SALE_LOS |
Loss on account of sale (Book Value-Sale Value) |
FA_SALE_PFT |
Profit on account of Sale |
FA_WRTO_AMT |
Amount Written Off (Book Value) |
FA_TSFR_AMT |
Transfer Amount (Asset Amount – Accumulated Depreciation) |
FA_ASST_AMT |
Asset Cost Capitalized |
FA_DEPR_ACQ |
Acquired depreciation to be charged |
FA_DEPR_WASH |
Depreciation Wash Amount |
In addition to these you can define amount tags as per your requirements for charges that will be attached to the product.
Listed below are the various Events along with the Amount Tags that would be used during the respective events.
Event |
Amount Tag |
Explanation of the Amount Tags |
BOOK |
FA_CAPT_AMT |
Asset Cost |
DEPR |
FA_DEPR_ADD |
Additional depreciation to be charged on account of increase in depreciation rate or change in depreciation method or change in capitalization date |
FA_DEPR_RED |
Reduction in cumulative depreciation on account of reduction in rate, change in capitalization date or change in depreciation method |
|
CAPT |
FA_CAPT_AMT |
Asset Cost capitalized |
AMND |
- |
- |
SALE |
FA_SALE_AMT |
Net Sale Value |
FA_SALE_LOS |
Loss on Account of Sale (Book Value-Net Sale Value) |
|
FA_SALE_PFT |
Profit on Account of Sale (Net Sale Value-Book Value) |
|
FA_DEPR_ACC |
Accumulated depreciation |
|
WRTO |
FA_WRTO_AMT |
Amount Written off (Book Value) |
FA_CAPT_AMT |
Asset Cost capitalized |
|
FA_DEPR_ACC |
Accumulated depreciation |
|
TSFR |
FA_DEPR_ACC |
Accumulated depreciation |
FA_TSFR_AMT |
Transfer Amount (Asset Amount – Accumulated Depreciation) |
In this section we have provided a list of sample accounting roles that can be used for all types of products in the Islamic Fixed Asset module:
Accounting Role |
Description |
Role Type |
FAASSETACC |
Asset Account |
Asset |
FAWIPACC |
Work-In-Progress Account |
Liability |
FACUSTACC |
Customer Account |
Customer |
FADEPREXP |
Depreciation Account |
Expense |
FAACCDEPRLIB |
Accumulated depreciation Acct |
Liability |
FASALEEXP |
Loss on Sale Account |
Expense |
FASALEINC |
Profit on Sale Account |
Income |
FAWRTOEXP |
Asset Written Off Account |
Expense |
FATSFRACC |
Transfer Account |
Asset |
In the subsequent sections we have defined suggested accounting entries and advices for each of the events in the life-cycle of a contract.
Accounting Entries
Condition |
Accounting Role |
Amount Tag |
Dr/Cr |
No PO required |
FAWIPACC |
FA_ASST_AMT |
Dr |
for Purchase |
FACUSTACC |
FA_ASST_AMT |
Cr |
The following accounting entries are passed for this event for Islamic inventory tracking:
Accounting Role |
Amount Tag |
Dr/Cr |
FAWIPACC |
FA_ASST_AMT |
Dr |
FACUSTACC |
FA_ASST_AMT |
Cr |
Accounting Entries
Condition |
Accounting Role |
Amount Tag |
Dr/Cr |
None |
FAASSETACC |
FA_CAPT_AMT |
Dr |
|
FAWIPACC |
FA_CAPT_AMT |
Cr |
Condition |
Accounting Role |
Amount Tag |
Dr/Cr |
Increase in depreciation |
FADEPREXP |
FA_DEPR_ADD |
Dr |
FAACCDEPRLIB |
FA_DEPR_ADD |
Cr |
|
Decrease in depreciation |
FAACCDEPRLIB |
FA_DEPR_RED |
Dr |
FADEPREXP |
FA_DEPR_RED |
Cr |
|
If Acquired depreciation is entered |
FAWIPACC |
FA_DEPR_ACQ |
Dr |
FAACCDEPRLIB |
FA_DEPR_ACQ |
Cr |
This event is used to wash off the depreciation that has been accumulated because of the depreciation entries posted during every principal payment schedule in the loan transaction and this event would be triggered from Manual or auto liquidation of a loan resulting in the final liquidation of the loan account.
The following accounting entries are passed for this event:
Accounting Role |
Amount Tag |
Dr /Cr |
FAACCDEPRLIB WASH (Accumulated Leasing Depreciation Account) |
FA_DEPR |
Dr |
FAASSETACC |
FAASSETACC |
Cr |
This event is used to reverse the wash entries posted during the final settlement of the loan. This will be invoked when we reverse the final payment of the loan and this event would be triggered from on reversing of the liquidation of a loan which had resulted in the final liquidation of the loan.
The following accounting entries are passed for this event:
Accounting Role |
Amount Tag |
Dr /Cr |
FAACCDEPRLIB(Accumulated Leasing Depreciation Account) |
-FA_DEPR_WASH |
Dr |
FAASSETACC |
-FA_DEPR_WASH |
Cr |
No Accounting Entries need to be captured at this stage since all the adjustments to be done will be taken care of by the depreciation processing event.
Condition |
Accounting Role |
Amount Tag |
Dr/Cr |
Loss on Sale |
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
FACUSTACC |
FA_SALE_AMT |
Dr |
|
FASALEEXP |
FA_SALE_AMT |
Dr |
|
FAASSETACC |
FA_CAPT_AMT |
Cr |
|
Profit on Sale |
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
FACUSTACC |
FA_SALE_AMT |
Dr |
|
FASALEINC |
FA_SALE_AMT |
Cr |
|
FAASSETACC |
FA_CAPT_AMT |
Cr |
In Oracle FLEXCUBE, all Credit and Debit entries have to be paired up. So the entries will be as follows:
Condition |
Accounting Role |
Amount Tag |
Dr/Cr |
Loss on Sale |
FACUSTACC |
FA_CAPT_AMT |
Dr |
FAASSETACC |
FA_CAPT_AMT |
Cr |
|
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
|
FACUSTACC |
FA_DEPR_ACC |
Cr |
|
FASALEEXP |
FA_SALE_AMT |
Dr |
|
FACUSTACC |
FA_SALE_AMT |
Cr |
|
Profit on Sale |
FACUSTACC |
FA_CAPT_AMT |
Dr |
FAASSETACC |
FA_CAPT_AMT |
Cr |
|
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
|
FACUSTACC |
FA_DEPR_ACC |
Cr |
|
|
FACUSTACC |
FA_SALE_AMT |
Dr |
|
FASALEINC |
FA_SALE_AMT |
Cr |
The following accounting entries are passed for this event for Islamic inventory tracking:
Accounting Role |
Amount Tag |
Dr/Cr |
FACUSTACC |
FA_SALE_AMT |
Dr |
FAWIPACC |
FA_SALE_AMT |
Cr |
Advices
A Payment message would be generated for the customer to whom the asset is sold.
Condition |
Accounting Role |
Amount Tag |
Dr/Cr |
None |
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
FAWRTOEXP |
FA_WRTO_AMT |
Dr |
|
FAASSETACC |
FA_CAPT_AMT |
Cr |
Since all debit and credit entries have to paired up in Oracle FLEXCUBE, the entries will be reflected as follows:
Condition |
Accounting Role |
Amount Tag |
Dr/Cr |
None |
FAWRTOEXP |
FA_CAPT_AMT |
Dr |
FAASSETACC |
FA_CAPT_AMT |
Cr |
|
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
|
FAWRTOEXP |
FA_DEPR_ACC |
Cr |
The Transfer event is automated and the transferred asset will be automatically created in the branch/location on save of transfer.
This event will be triggered when the asset is transferred from one branch/ location to another.
The Accounting entry setup for the asset in Transferor and Transferee branch will be as described below.
1) Asset still in WIP stage
Transferor branch – Event TSFR
DR/CR |
Accounting Role |
Amount Tag |
||
|
Role |
Description |
Tag |
Description |
DR |
FATSFRACC |
Transfer Account (Transferee Branch) |
FA_ASST_AMT |
Original Asset cost |
CR |
FAWIPACC |
Work in Progress Account (Transferor Branch) |
FA_ASST_AMT |
Original Asset cost |
Transferee Branch – Event BOOK
DR/CR |
Accounting Role |
Amount Tag |
||
|
Role |
Description |
Tag |
Description |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_ASST_AMT |
Original Asset cost |
CR |
FACUSTACC |
Customer Account |
FA_ASST_AMT |
Original Asset cost |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_TSFR_AMT |
Original Asset cost |
CR |
FATSFRACC |
Transfer Account (Transferor Branch) |
FA_TSFR_AMT |
Original Asset cost |
Only the second set of entries will be passed in case of an asset transfer.
1) Capitalized Asset
Transferor branch – Event TSFR
DR/CR |
Accounting Role |
Amount Tag |
||
|
Role |
Description |
Tag |
Description |
DR |
FATSFRACC |
Transfer Account (Transferee Branch) |
FA_ASST_AMT |
Original Asset cost |
CR |
FASSTACC |
Asset Account (Transferor Branch) |
FA_ASST_AMT |
Original Asset cost |
DR |
FAACCDEPRLIB |
Accumulated depreciation Account |
FA_DEPR_ACC |
Accumulated Dep. |
CR |
FATSFRACC |
Transfer Account (Transferee Branch) |
FA_DEPR_ACC |
Accumulated Dep. |
Transferor Branch – Event DEPR (Along with TSFR)
DR/ CR |
Accounting Role |
Amount Tag |
||
|
Role |
Description |
Tag |
Description |
DR |
FADEPREXP |
Dep. Expense |
FA_DEPR_ADD |
Depreciation Addition |
CR |
FAACCDEPRLIB |
Accumulated depreciation Account |
FA_DEPR_ADD |
Depreciation Addition |
DR |
FAACCDEPRLIB |
Accumulated depreciation Account |
FA_DEPR_RED |
Depreciation Reduction |
CR |
FADEPREXP |
Dep. Expense |
FA_DEPR_RED |
Depreciation Reduction |
Transferee Branch – Event BOOK
DR/ CR |
Accounting Role |
Amount Tag |
||
|
Role |
Description |
Tag |
Description |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_ASST_AMT |
Original Asset cost |
CR |
FACUSTACC |
Customer Account |
FA_ASST_AMT |
Original Asset cost |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_TSFR_AMT |
Original Asset cost – Acquired Depreciation |
CR |
FATSFRACC |
Transfer Account ( Transferor Branch) |
FA_TSFR_AMT |
Original Asset cost - Acquired Depreciation |
Only the second set of entries will be passed in case of an asset transfer.
Transferee Branch – Event DEPR (Along with BOOK)
DR/ CR |
Accounting Role |
Amount Tag |
||
|
Role |
Description |
Tag |
Description |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_DEPR_ACQ |
Acquired Depreciation |
CR |
FAACCDEPRLIB |
Accumulated depreciation Account |
FA_DEPR_ACQ |
Acquired Depreciation |
Capitalization entries will be passed as usual for the new asset.
The following details the possible advices and the stage at which the advices are generated for the Accounting entries:
Advice Code |
Advice Description |
Receiver |
PAYMENT_MESSAGE |
Payment Message |
Counterparty |
This advice is generated on Book Event (If PO required is ‘N” at product level) and on Sale Event.
On transfer of an asset, a transfer advice called FA_TRANSFER will be generated. Following details will be available in the transfer advice –
The receiver of the advice will be the Walk in Customer for the Transferor Branch.