Understanding the Depreciation Allocation Business Process
PeopleSoft Asset Management enables you to allocate depreciation expenses or asset costs across multiple departments or ChartField combinations. The allocation might be divided equally among all departments or selected ChartField combinations, or it might be calculated on a factor that is appropriate to your business, such as a prorata basis.
In some business environments, allocation of depreciation expenses to departments or ChartField combinations other than those assigned to an asset's cost might be required. For example, depreciation expenses for shared services assets such as HVAC (Heating, Ventilation, Air Conditioning) for a store in a mall might be needed to allocate the expenses across all departments using the service. The allocation might be spread evenly among all departments, or it might be calculated on a prorata basis based on the square footage of each department or some other factor.
PeopleSoft Asset Management enables you to create and process allocations before posting depreciation to the general ledger. Allocation amounts are derived in PeopleSoft Asset Management from the DIST_LN table, which is populated by accounting entry generation programs such as the Accounting Entry Creation process (AM_AMAEDIST) and the Depreciation Close process (AM_DPCLOSE). The allocation process must be run after running these programs and before journal generation. The allocation program takes unposted journal lines from the DIST_LN table, processes them according to the defined allocation, and creates new allocation entries. Also, lines that have already been sent to the general ledger by previous journal generation are available to allocate.
When an educational or governmental entity acquires a capital asset, the transaction is usually accounted for as a budgeted or funded acquisition. Other programs within PeopleSoft provide the tools to perform budget checking, such as in the Purchase Order and Accounts Payable transaction processing. After the transaction to acquire the asset is completed, PeopleSoft Asset Management creates ongoing depreciation transactions. It is important that the asset depreciation entries do not inherit the original budget reference during creation of period depreciation entries because the original budget reference is not appropriate for future year's depreciation.
For example, assume that the current financial year is 2008 with budget year of 2007. An asset was added on 01/01/2005 with a budget year of 2005. All of the depreciation rows for 2008 are created with the budget year of 2005. When the depreciation entries for 2008 are posted to the general ledger, they have an incorrect budget year of 2005.
To accommodate the use of budget or fund accounting in PeopleSoft Asset Management, it is recommended that you use the allocation process to reallocate the depreciation and other transactions to the active budget reference and year. This program is run after the accounting entry creation process and depreciation close process have been run.