This section contains details of the suggested accounting entries that can be set up, for the FA 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 an FA contract. In the subsequent paragraphs we shall examine the accounting entries and advices for each of the events listed below.
Sl No |
Event Code |
Event Description |
Remarks |
1 |
BOOK |
Booking an FA contract (Mandatory) |
All Types |
2 |
CAPT |
Capitalization of an asset |
All Types |
3 |
DEPR |
Depreciation Processing for Booking |
All Types |
4 |
AMND |
Amendment of a contract |
All Types |
5 |
SALE |
Sale of an asset |
All Types |
6 |
WRTO |
FA Write off |
All Types |
7 |
DPTX |
Depreciation for Tax purposes (no accounting entries are passed for this event) |
All Types |
8 |
REVC |
Reversal of a contract |
All Types. |
9 |
TSFR |
Transfer of Asset |
|
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) |
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 |
DEPR |
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 |
SALE |
FA_SALE_AMT |
Net Sale Value |
SALE |
FA_SALE_LOS |
Loss on Account of Sale (Book Value-Net Sale Value) |
SALE |
FA_SALE_PFT |
Profit on Account of Sale (Net Sale Value-Book Value) |
SALE |
FA_DEPR_ACC |
Accumulated depreciation |
WRTO |
FA_WRTO_AMT |
Amount Written off (Book Value) |
WRTO |
FA_CAPT_AMT |
Asset Cost capitalized |
WRTO |
FA_DEPR_ACC |
Accumulated depreciation |
TSFR |
FA_DEPR_ACC |
Accumulated depreciation |
TSFR |
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 FA 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 an FA contract.
Accounting Entries
Condition |
Accounting Role |
Amount Tag |
Dr./Cr. Indicator |
No PO required |
FAWIPACC |
FA_ASST_AMT |
Dr |
for Purchase |
FACUSTACC |
FA_ASST_AMT |
Cr |
Accounting Entries
Condition |
Accounting Role |
Amount Tag |
Dr./Cr. Indicator |
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 |
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 |
Loss on Sale |
FACUSTACC |
FA_SALE_AMT |
Dr |
Loss on Sale |
FASALEEXP |
FA_SALE_LOS |
Dr |
Loss on Sale |
FAASSETACC |
FA_CAPT_AMT |
Cr |
Profit on Sale |
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
Profit on Sale |
FACUSTACC |
FA_SALE_AMT |
Dr |
Profit on Sale |
FAASSETACC |
FA_CAPT_AMT |
Cr |
Profit on Sale |
FAASSETACC |
FA_SALE_PFT |
Dr |
Profit on Sale |
FASALEINC |
FA_SALE_PFT |
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_SALE_AMT |
Dr |
Loss on Sale |
FAASSETACC |
FA_SALE_AMT |
Cr |
Loss on Sale |
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
Loss on Sale |
FAASSETACC |
FA_DEPR_ACC |
Cr |
Loss on Sale |
FASALEEXP |
FA_SALE_LOS |
Dr |
Loss on Sale |
FAASSETACC |
FA_SALE_LOS |
Cr |
Profit on Sale |
FACUSTACC |
FA_SALE_AMT |
Dr |
Profit on Sale |
FAASSETACC |
FA_SALE_AMT |
Cr |
Profit on Sale |
FAACCDEPRLIB |
FA_DEPR_ACC |
Dr |
Profit on Sale |
FAASSETACC |
FA_DEPR_ACC |
Cr |
Profit on Sale |
FAASSETACC |
FA_SALE_PFT |
Dr |
Profit on Sale |
FASALEINC |
FA_SALE_PFT |
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 |
Description |
Amount 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 |
Description |
Amount 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.
2) Capitalized Asset
Transferor branch – Event TSFR
DR/CR |
Accounting Role |
Description |
Amount Tag |
Description |
DR |
FATSFRACC |
Transfer Account (Transferee Branch) |
FA_CAPT_AMT |
Original Asset cost |
CR |
FASSTACC |
Asset Account (Transferor Branch) |
FA_CAPT_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 |
Description |
Amount 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 |
Description |
Amount 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 |
Description |
Amount 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.
Examples
Formula for calculating depreciation to be passed / reversed:
Depreciation already done for current period =
YTD depreciation – (Depreciation per period * No. of previous periods)
Depreciation to be reversed (If Dep. Effective date <= Cut Off date) =
Depreciation already done for the current period
Depreciation to be passed (If Dep. Effective date > Cut Off date) =
Depreciation per period - Depreciation already done for current period
The above formula will be valid for WDV method of depreciation also since the depreciation process considers the Written Down Value of the asset only as of the beginning of the current financial year.
Consider the following parameters –
Financial Year - 01-Jan-2008 to 31-Dec-2008
Depreciation period - Quarterly
Cut off Month - 1
Cut off Date - 20
Depreciation effective date - 17-Apr-2008
Transfer Date - 25-Aug-2008
Asset Cost - 12000
Depreciation rate - 10%
Now according to the above parameters,
If asset is acquired in current year, we need to find out the period when depreciation started.
Depreciation Start period = 2 (2nd quarter of the year)
Transfer is happening in the 3rd Period, So No of previous periods = 3-2 =1
Total depreciation for the year = 12000*10/100 =1200
Actual depreciation for the year = 1200 * Applicable periods/No of periods in a year
= 1200 * 3/4
= 900
Depreciation per period = 900 / 3
= 300
Let us assume that when the transfer is happening on 25-Aug-2008 YTD depreciation is 475. Since transfer is happening after the cut off date (10-Jul-2008) for the 3rd period, we need to complete depreciation for this period. According to the above formula –
Depreciation already done for current period = 475 – [(300 * (2-1)]
= 175
Extra depreciation to be passed = 300-175
= 125
This is the amount for which depreciation entry is passed on transfer.
Let us now assume that the cut off date is 27-Aug-2008. Since transfer is happening before the cut off date, we need to reverse the depreciation for this period
Depreciation already done for current period = 475 – [(300 * (2-1)]
= 175
Depreciation to be reversed = 175
1) Asset transferred before Cut off date
Consider the following parameters for a fixed asset –
Asset Cost – 12000
Acquisition Date – 10-Nov-2007
Capitalization date – 17-Jan-2008
Effective depreciation date – 17-Jan-2008 (Defaulted to Capitalization date)
Depreciation Period – Quarterly
Cut off date – 20
Cut off period – 1
Depreciation Frequency – Monthly
Frequency start date – 15
Depreciation Rate –10% Per Annum
Fin year start date - 01-Jan-2008
Fin year end date - 31-Dec-2008
According to the above parameters, the cut off date for depreciation is 20-Jan-2008. Any asset having effective depreciation date on or before 20-Jan-2008 will be depreciated for 4 periods in the first year. Any asset having effective depreciation date after 20-Jan-2008 will be depreciated will be depreciated only for the next 3 periods in the first year. Since our asset has effective depreciation date as 17-Jan-2008 which is before the cut off date, it will be depreciated for the full year. Since we are considering the case where transfer is done in the first year itself, accumulated depreciation will always be the same as YTD depreciation.
Depreciation on 15-feb-2008
Total depreciation for the year =
[(Asset cost * rate)* Applicable dep. Periods]/ No of depreciation periods I the year
= [(12000*.10)*4]/4
=1200
Total depreciation runs in the year =12 (Monthly frequency)
Future Depreciation runs left =10 (march Onwards)
Future depreciation =1200*10/12
=1000
Depreciation to be passed this time =1200-1000
=200
Depreciation accounting entries (DEPR event) on 15-feb-2008
Accounting entries passed on 15-Feb-2008
DR/CR |
Accounting Role |
Description |
Amount Tag |
Description |
DR |
FADEPREXP |
Dep. Expense |
FA_DEPR_ADD |
200 |
CR |
FAACCDEPRLIB |
Accumulated Dep. |
FA_DEPR_ADD |
200 |
Accounting entries passed on 15-Mar-2008
DR/CR |
Accounting Role |
Description |
Amount Tag |
Description |
DR |
FADEPREXP |
Dep. Expense |
FA_DEPR_ADD |
100 |
CR |
FAACCDEPRLIB |
Accumulated Dep. |
FA_DEPR_ADD |
100 |
Accounting entries passed on 15-Apr-2008
DR/CR |
Accounting Role |
Description |
Amount Tag |
Description |
DR |
FADEPREXP |
Dep. Expense |
FA_DEPR_ADD |
100 |
CR |
FAACCDEPRLIB |
Accumulated Dep. |
FA_DEPR_ADD |
100 |
Now let us assume that the asset is transferred to another branch/location on 17-Apr-2008.
Cut off date for asset transfer will be taken from branch parameters. For this case it will be 20-Apr-2008.
Since the asset is transferred before the cut off date, any depreciation done for the asset in the 2nd depreciation period will be reverted back on transfer from the transferor branch.
YTD depreciation = 200+100+100
= 400
Depreciation already done for current period =
YTD depreciation - Depreciation for all previous periods
= 400 - 300
= 100
Acquired depreciation for the asset in new branch/location =
Accumulated Dep.- Dep. for current period
= 400-100
= 300
Accumulated Depreciation also now becomes 300.
Accounting entries passed in the transferor branch –
Event – TSFR
DR/CR |
Accounting Role |
Description |
Amount Tag |
Description |
DR |
FATSFRACC |
Transfer Account (Transferee Branch) |
FA_ASST_AMT |
12000 |
CR |
FASSTACC |
Asset Account (Transferor Branch) |
FA_ASST_AMT |
12000 |
DR |
FAACCDEPRLIB |
Accumulated depreciation Account |
FA_DEPR_ACC |
300 |
CR |
FATSFRACC |
Transfer Account (Transferee Branch) |
FA_DEPR_ACC |
300 |
Event – DEPR (Triggered along with TSFR)
DR/CR |
Accounting Role |
Description |
Amount Tag |
Description |
DR |
FAACCDEPRLIB |
Accumulated Dep. |
FA_DEPR_RED |
100 |
CR |
FADEPREXP |
Dep. Expense |
FA_DEPR_RED |
100 |
Accounting entries passed in the transferee branch –
Event BOOK
DR/CR |
Accounting Role |
Description |
Amount Tag |
Description |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_TSFR_AMT |
11700 |
CR |
FATSFRACC |
Transfer Account ( Transferor Branch) |
FA_TSFR_AMT |
11700 |
Event DEPR (Triggered along with BOOK)
DR/CR |
Accounting Role |
Description |
Amount Tag |
Description |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_DEPR_ACQ |
300 |
CR |
FAACCDEPRLIB |
Accumulated depreciation Account |
FA_DEPR_ACQ |
300 |
From here onwards, the depreciation of the asset will be done in the new branch/location with the rule defined for the new category – location combination.
2) Asset transferred after Cut off date
Assume that everything remains the same as the previous asset but the asset is transferred on 10-May-2008 i.e after the cut off date. In this case, the system will depreciate the asset for the current period fully on transfer and depreciation in the new branch/location will start from the next period onwards only. Since we are considering the case where transfer is done in the first year itself, accumulated depreciation will always be the same as YTD depreciation.
YTD depreciation (after depreciation on 15-Apr) = 200+100+100
= 400
Total depreciation for current period = Dep. for the year/No of dep. Periods = 900/3
=300
Depreciation already done for current period
= YTD depreciation - Depreciation for all previous periods
= 400 -100
= 100
Remaining dep. For current period = 300-100 = 200
Acquired depreciation for the asset in new branch/location
= Accumulated Depreciation
= Current Accumulated Dep.+ Remaining Dep. for current period
= 400+200
= 600
Accounting entries passed in the transferor branch –
Event – TSFR
DR/CR |
Accounting Role |
Description |
Amount Tag |
Amount |
DR |
FATSFRACC |
Transfer Account (Transferee Branch) |
FA_ASST_AMT |
12000 |
CR |
FASSTACC |
Asset Account (Transferor Branch) |
FA_ASST_AMT |
12000 |
DR |
FAACCDEPRLIB |
Accumulated depreciation Account |
FA_DEPR_ACC |
600 |
CR |
FATSFRACC |
Transfer Account (Transferee Branch) |
FA_DEPR_ACC |
600 |
Event – DEPR (Triggered along with TSFR)
DR/CR |
Accounting Role |
Description |
Amount Tag |
Amount |
DR |
FADEPREXP |
Dep. Expense |
FA_DEPR_ADD |
200 |
CR |
FAACCDEPRLIB |
Accumulated Dep. |
FA_DEPR_ADD |
200 |
Accounting entries passed in the transferee branch –
Event BOOK
DR/CR |
Accounting Role |
Description |
Amount Tag |
Amount |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_TSFR_AMT |
11400 |
CR |
FATSFRACC |
Transfer Account ( Transferor Branch) |
FA_TSFR_AMT |
11400 |
Event DEPR (Triggered along with BOOK)
DR/CR |
Accounting Role |
Description |
Amount Tag |
Amount |
DR |
FAWIPACC |
Work in Progress Account (Transferee Branch) |
FA_DEPR_ACQ |
600 |
CR |
FAACCDEPRLIB |
Accumulated depreciation Account |
FA_DEPR_ACQ |
600 |
From here onwards, the depreciation of the asset will be done in the new branch/location with the rule defined for the new category – location combination.
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.