Understanding Asset Retirement
PeopleSoft Asset Management enables you to fully or partially retire assets in the past, present, or future. Occasionally, a retirement transaction may require a reversal. In that case, you can reinstate a retired asset using the pages in the Asset Retirements component.
You retire assets when they are either disposed of or no longer in use. When you retire an asset, PeopleSoft Asset Management creates all the necessary journal entries. For example, when you sell an asset, the system calculates depreciation through the date of the sale, as well as any gain or loss. In addition, you can have the system create journal entries corresponding to each of these events. Gains and losses are booked to separate accounts, providing flexibility in updating general ledger journals and balances.
An asset is retired by its book designation; therefore, you can retire an asset in one book, but it is still available for depreciation in others. You can reinstate retired assets at any time. When assets are reinstated, depreciation starts again for them if they are not fully depreciated.
Assets are fully or partially retired by quantity or by cost. You can also enter retroactive retirement information for assets that were actually retired in a prior accounting period.
When the full quantity and total cost of an asset are retired, the asset is considered fully retired. The asset is taken off the books after the retirement has been fully processed and accounting entries have been created. No further depreciation accrues.
You can partially retire an asset, and the system continues to process depreciation for the amount that remains. Two types of partial retirement are available:
You can partially retire assets by quantity. For example, if you have 250 computers, and you sell 50 of them to employees, you enter the 50 units as the quantity retired. PeopleSoft Asset Management calculates the corresponding cost.
You can partially retire assets by cost. For example, suppose that you partially retire a computer for the price of the computer monitor, 400 USD, and you sell the monitor for 100 USD. The total cost of the computer is 1500 USD. The cost (400 USD) is the amount retired, and the 100 USD is the proceeds from the sale. PeopleSoft Asset Management automatically calculates the gain or loss based on these amounts.
To enter a retirement transaction for an asset that was actually retired in a prior accounting period, you must enter transaction and accounting dates that reflect the actual retirement and the accounting period in which you want the retirement posted. For example, suppose that an asset sold on April 30 was processed as a retirement in PeopleSoft Asset Management on June 30. By the time the asset is entered as a retirement, depreciation expense for May and June post to the general ledger. That posting results in overstated accumulated depreciation and an incorrect gain or loss. To correctly process this retirement, you would specify April 30 as the transaction date and—assuming all prior periods are closed—June 30 as the accounting date. PeopleSoft Asset Management then reverses the accumulated depreciation attributable for May and June and calculates the correct gain or loss on the asset.