Understanding Asset Capitalization Processes
PeopleSoft Project Costing manages the transaction costs associated with assets from inception to cost value adjustment to retirement. Full lifecycle asset management provides detailed cost control, from defining the physical asset to placing it in service, maintaining it, and retiring it. You can create assets from project transactions by using either express capitalization or manual capitalization.
This topic discusses:
Express capitalization.
Manual capitalization.
Asset integration rules.
Currency summary options.
Asset review and approval.
Asset reversals.
Work order-managed projects.
Asset assignment to multiple projects.
Transaction assignment to assets.
Interunit asset transfers.
Express capitalization simplifies the process of creating assets by consolidating manual tasks. It is available only if you use PeopleSoft Asset Management.
To use express asset capitalization:
Set up filter criteria that specifies which transaction costs are eligible to make up the cost basis of the asset.
Set up capitalization rules in advance at the business unit level that default to new projects and activities as they are created.
The rules specify such things as the timing of asset creation, the relationship of projects and activities to asset creation, and how to handle asset adjustments.
Use the Express Asset Definition pages to define assets and their attributes and to relate those assets to projects and activities.
The specific express asset page that you will use is based on the rule that you use to identify the asset.
Run the Express Capitalization Application Engine process (PC_EXPRSS_AM) that uses the filter and rules that are set up in previous steps to create or adjust assets, assign transaction costs to assets, and send assets from PeopleSoft Project Costing to PeopleSoft Asset Management.
You can set up the process to require approval of summary data before you send it to PeopleSoft Asset Management.
Note: You can use the express capitalization functionality to summarize assets by asset, but not to summarize assets by profile.
Use manual capitalization processes if asset integration requires manual intervention, or if you want to:
Summarize transactions by profile.
Process asset information at the book level.
To use manual asset capitalization:
Set up asset profiles.
Asset profiles are templates that contain standard depreciation criteria for asset types and the corresponding asset books. Asset profiles are usually set up in PeopleSoft Asset Management, but they can also be created in PeopleSoft Project Costing if Asset Management is not installed.
See Asset Profile Page.
Set up these asset integration rules on the Asset Integration Rules page for integrating with PeopleSoft Asset Management:
Select Enable Integration in the Asset Integration Defaults group box.
Select Manual Identification in the Asset Identification Rule group box.
Define assets in PeopleSoft Project Costing.
If the actual asset that is produced by a project is not yet known, define the asset by using a temporary asset ID and an asset profile.
Relate the defined assets to the projects and activities that accumulate costs for the assets.
Project transactions can be associated with a specific asset or, if the actual asset is not yet known, with an asset profile. Projects and activities can be related to the asset by project ID or asset ID.
Select and group (filter) transaction attributes into criteria that the system uses to identify transactions to assign to the asset or asset profile.
Note: You set up filter criteria for the manual capitalization process on the Define Filter Criteria - Standard 1, Standard 2, and Custom pages. This differs from the filter criteria that you set up for the express capitalization process on the Express Asset Filter Criteria page.
Periodically run the capitalization process that summarizes project transactions based on asset or profile information, distributes the costs, and creates new assets in PeopleSoft Asset Management.
You can set up the process to require approval of summary data before you send it to PeopleSoft Asset Management.
This diagram illustrates the process of manually capitalizing assets and lists the related application pages that you use in PeopleSoft Project Costing. The arrows represent links to pages in the PeopleSoft Project Costing application:
Book Processing
You can select the Enable Book Processing option on the Define Assets page to process asset information at the book level. With this option the system populates each book with default information from the book profile, such as salvage value, useful life, depreciation method, or depreciation convention. For example, by using book processing an asset valued at 10,000.00 USD on the corporate book may be value at only 9,000.00 USD on the tax book if a tax rule prevents you from capitalizing the difference.
As another example, assume that an asset is created from these transaction rows:
|
Source Type |
Amount |
|---|---|
|
LABOR |
3,000.00 USD |
|
MATERIALS |
2,000.00 USD |
|
INTEREST |
1,000.00 USD |
In this example, the corporate book allows all three types of costs to be capitalized, but the tax book does not allow you to capitalize interest costs. To track this asset, set up two filter criteria—one called CORP_CRITERIA that includes all the rows, and another called TAX_CRITERIA that only includes LABOR and MATERIALS. Associate CORP_CRITERIA to the corporate book and TAX_CRITERIA to the tax book in the same manner that you perform the assign process for a nonbook asset.
When you associate the criteria with their respective books, processing for the asset occurs in the same manner as for a nonbook asset. Setting up filter criteria for each book and associating each criterion with its appropriate book results in sending a different value for each book to PeopleSoft Asset Management. You use Selection Criteria pages to define transactions for assignment to assets and to specify to which books each transaction is posted. If you post transactions to more than one book, the Assign Transactions to Assets page displays multiple rows (one for each book).
When you search for assets on the Review Assets page, you can limit the search results to assets that use the book processing functionality. The amount for the default book for each asset appears in the search result rows on the Integration Summary page.
The asset integration rules that you establish at the business unit level appear as default values when you create projects. You can override the default asset integration rules at the project level. Activities inherit asset integration rules from the project level. Some of these rules are not available to change at the activity level based on the project-level option that you select to distribute project costs to assets.
Asset integration rules consist of:
Asset integration defaults which consist of an option to enable integration with PeopleSoft Asset Management, the integration type (capitalization or retirement), and the filter that identifies the rows from the Project Transaction table (PROJ_RESOURCE) that are eligible for retirement or capitalization.
Rules that specify how to identify an asset.
For example, you can instruct the system to create only one asset for each activity, or one asset from many activities, and so on.
Timing triggers that specify when to create an asset.
For example, you can specify that asset processing can create a new asset when a project status is approved, or an activity is 95 percent complete, and so on.
The asset location source that indicates if the asset integration process uses the asset definition's location code or the activity definition's location code to determine the asset's location.
Rules that specify the destination of the asset rows that result from the capitalization processes.
For example, you can choose to: Summarize asset transaction rows in the PC to AM (Project Costing to Asset Management) Staging table (PROJ_AM), but not send the rows to the PeopleSoft Asset Management Loader tables (INTFC_FIN and INTFC_PHY_A). If you do not require asset approval prior to sending assets to PeopleSoft Asset Management, you can:
Summarize asset transaction rows in the PC to AM Staging table and send them to the PeopleSoft Asset Management Loader tables, but not send the rows to the PeopleSoft Asset Management transaction tables.
Summarize asset transaction rows in the PC to AM Staging table, send them to the PeopleSoft Asset Management Loader tables, and send the rows to the PeopleSoft Asset Management transaction tables. This option is available if you do not require asset approval prior to sending assets to PeopleSoft Asset Management.
Rules that specify how to adjust assets.
Inherit Asset Integration Rules from Programs
You can set up a project to inherit its asset integration rules from a program instead of from the business unit by entering the program name on the Asset Integration Rules page for a project. Use this functionality if there is a summary project or program that contains child projects, each of which need to contribute transaction costs to the same asset.
When you use the program asset integration rules for a project that belongs to the program, the system:
Overrides all of the rules on the project to match the specified program.
Overrides all of the rules for activities that are already associated with the project to match the parent project.
Disables all of the integration rules, except for the rules in the Asset Integration Defaults group box on the Asset Integration Rules page.
The disabled fields are available for editing again if you deselect the Inherit from Program field and save the page.
Prevents a change to the identification option if assets are related to the project.
When you change the asset integration rules at the program level, the system also changes the corresponding project and activity rules to keep the rules synchronized across all projects that contribute to an asset.
End-of-Year Rule
The Express Capitalization process triggers end-of-year processing. You can select one of these options that determines how the system treats asset adjustments at the end of the fiscal year:
Ignore end of year: The system creates asset adjustments as if there is no designated end of year.
Create parent/child assets: The system creates new assets that are children to the original (now parent) assets if adjustments are sent from the project after the specified end of the year. All adjustments belong to the child assets.
Create new asset: The system creates new assets if adjustments are sent after the specified end of the year. All adjustments belong to new assets instead of child assets.
Stop sending adjustments: The system does not send adjustments to PeopleSoft Asset Management after the specified end of year.
The system assigns the next available asset ID automatically when it creates a new asset during end-of-year processing. In this situation you cannot manually assign the asset ID.
The in-service date of an asset is used as the reference point to determine the end of a year. So, an asset in-service date of December 1, 2005, a last month of year of December, and a last day of year of 31, allows only one month before the end-of-year treatment occurs after December 31, 2005. An asset with an in-service date of January 1, 2006, however, has one year until the end-of-year treatment occurs after December 31, 2006.
The following table provides examples of how adjustments are treated for all four end-of-year rules. Assume in these examples that you use a 5-4-4 quarter and the current fiscal year ends on April 2, 2005:
|
Scenario |
Ignore End of Year |
Create Parent/Child Assets |
Create New Asset |
Stop Sending Adjustments |
|---|---|---|---|---|
|
Project Asset 1 created and sent to PeopleSoft Asset Management with an in-service date of February 24, 2005. The cost of the asset is 10,000.00 USD. |
No adjustment is made at this time |
No adjustment is made at this time |
No adjustment is made at this time |
No adjustment is made at this time |
|
An adjustment of 2,000.00 USD is made to asset. The run date of the PC_EXPRSS_AM process is April 1, 2005. |
2,000.00 USD is added to Asset 1 |
2,000.00 USD is added to Asset 1 |
2,000.00 USD is added to Asset 1 |
2,000.00 USD is added to Asset 1 |
|
An adjustment of 1,500.00 USD is made to asset. The run date of the PC_EXPRSS_AM process is April 16, 2005. |
1,500.00 USD is added to Asset 1 |
New child asset with a cost of 1,500.00 USD is created with Asset 1 as its parent |
New asset with a cost of 1,500.00 USD is created and does not have Asset 1 as its parent |
No adjustment is sent to PeopleSoft Asset Management |
PeopleSoft Project Costing capitalization processes evaluate transaction currency when summarizing project transaction costs. During installation you can choose the level of currency detail to send to PeopleSoft Asset Management when you capitalize assets.
In a multicurrency environment, where the currency may vary between the transaction, the project, and the Asset Management book, you may want to retain the currency transaction details in PeopleSoft Asset Management. Use the multiple currency summarization option if you want the capitalization processes to summarize down to the five currency fields—Transaction Currency Code, Currency Effective Date, Rate Multiplier, Rate Divisor, and Rate Type.
Alternatively, in a single currency environment, you have no need to maintain transaction currency detail in PeopleSoft Asset Management. You can select the single currency summarization installation option for the system to ignore the five currency fields and achieve a greater level of summarization.
Example of a Multiple Currency Environment
Assume that many transactions exist for a project in January 2007. Among the transactions there are two different transaction currency codes and two different currency effective dates. In this example the transactions have the same rate multiplier, rate divisor, and rate type. In a multicurrency environment, PeopleSoft Project Costing summarizes down to the detail currency level and sends three transactions to PeopleSoft Asset Management, as shown in this table:
|
Transaction Amount |
Transaction Currency Code |
Currency Effective Date |
|---|---|---|
|
100 |
FRF |
January 1, 2007 |
|
100 |
FRF |
January 15, 2007 |
|
100 |
YEN |
January 15, 2007 |
Example of a Single Currency Environment
Assume that these three transactions exist for a project in January 2007:
|
Transaction Amount |
Transaction Currency Code |
Project Amount |
Project Currency Code |
Currency Effective Date |
|---|---|---|---|---|
|
50 |
USD |
50 |
USD |
January 1, 2007 |
|
60 |
USD |
60 |
USD |
January 15, 2007 |
|
140 |
USD |
140 |
USD |
January 31, 2007 |
In a single currency environment, PeopleSoft Project Costing sends one summarized transaction in the amount of 250 USD to PeopleSoft Asset Management, as shown in this table:
|
Transaction Amount |
Transaction Currency Code |
Currency Effective Date |
|---|---|---|
|
250 |
USD |
January 31, 2007 |
This diagram illustrates the capitalization processes of summarizing costs, sending data to the PC to AM Staging table, sending data to PeopleSoft Asset Management loader tables, and loading the transactions into PeopleSoft Asset Management production tables:
Prior to sending data to PeopleSoft Asset Management, you can review the summarized costs of assets and perform these actions:
Review and approve asset transactions that are in the PC to AM Staging table before sending them to PeopleSoft Asset Management Loader tables.
Reject asset transactions that are in the PC to AM Staging table before sending them to PeopleSoft Asset Management Loader tables.
Proceed with the capitalization process with no changes.
During installation you can select Require Asset Approval in the Asset Management Integration group box on the Installation Options - Project Costing Integration page to require approval of asset transactions before they are sent to the PeopleSoft Asset Management Loader tables.
You can reverse transaction rows that were incorrectly distributed to PeopleSoft Asset Management if the transactions are associated with projects that have an active processing status. For example, assume that cost data is sent to PeopleSoft Asset Management, after which you realize that an incorrect amount was used to capitalize the asset. The high level steps to reverse transaction rows are:
Access the Review Assets page, search for the erroneous asset, and determine which summarized row contains the incorrect amount.
Select the Reverse option on the Integration Summary page and run the process to send the reversal to PeopleSoft Asset Management.
You can view rows that are already distributed to PeopleSoft Asset Management in both summary and detail format, and reverse transactions as necessary. Reversing a row does not roll back to the original transaction, as doing so would not maintain an accurate audit trail. Instead, a reversal results in the creation of two additional rows—the reversing transaction that is sent to PeopleSoft Asset Management and a new, undistributed transaction in PeopleSoft Project Costing.
You cannot reverse asset transactions for projects with an inactive processing status. For this reason, on the Review Assets - Integration Summary page you can only view asset transactions for projects that are currently inactive. You cannot select or modify the review status of transactions for inactive projects. If an asset is associated with multiple projects and some of those projects are inactive, the rows that appear on the Review Assets - Integration Summary page are disabled (read-only) for the inactive projects and enabled for the active projects.
You cannot reverse temporary assets that have already been replaced by permanent assets. In other words, if you create temporary assets in PeopleSoft Asset Management by using the Summarize by Profile feature in PeopleSoft Project Costing, and subsequently create permanent assets by using the Summarize by Asset feature, you can no longer reverse the temporary assets.
PeopleSoft uses work orders to track the costs associated with maintaining or creating assets. In PeopleSoft Maintenance Management, a work order consists of one or more work order tasks. Each task specifies the asset that is being maintained and a related project and activity, and contains the transaction costs of performing asset maintenance. The transaction costs flow from PeopleSoft Maintenance Management into various PeopleSoft applications such as PeopleSoft Time and Expense, Inventory, and Payables, and from these systems into PeopleSoft Project Costing.
If you use PeopleSoft Maintenance Management, you can designate projects as work order-managed. Work order-managed projects is a term that refers to projects that are managed with work orders in PeopleSoft Maintenance Management, instead of by a project manager in PeopleSoft Project Costing. You can use work order-managed projects to capitalize, adjust, or retire assets in PeopleSoft Asset Management. For example, you can use a work order-managed project to track several unrelated maintenance tasks for an asset, or to track the cost of constructing an asset.
This is an example of a process flow for a work order-managed project that is used to track the cost of constructing an asset:
Plan and budget for construction of an asset.
Obtain approval for the construction.
Create a project plan and work orders to construct the asset.
Complete the work orders.
Capture the costs—labor, materials, and depreciation—that are associated with the effort.
Capitalize the project costs.
A work order task can specify only one asset, one project, and one activity. For work order-managed projects:
You can create multiple assets from a single project.
You can maintain a single asset from multiple projects.
The PeopleSoft Maintenance Management system creates assets from work order tasks and relates the assets to projects and activities. You can use the Define Assets and Relate by Project pages to view the details of asset definitions and the relationship of assets to projects for assets that are associated with work order-managed projects.
The system automatically updates certain fields on the Asset Integration Rules page during the life of a work order-managed project, such as:
When you save a project as a work order-managed project, the system automatically selects the asset identification rule of Derive from Work Order Task and the adjustment trigger of Automatic.
When Derive from Work Order Task is selected, the Express Retirement (PC_EXPRET_AM) or Express Capitalization processes begin with the closure of a work order task.
When you change a work order task status to complete, the system updates the filter ID (filter identifier) and integration type at the activity level to reflect the criteria in PeopleSoft Maintenance Management.
You can associate the same asset with multiple projects if any of these conditions exist:
The projects are work order-managed.
Asset integration is disabled on all but one of the projects.
The projects belong to the same program, and the asset is not associated with projects that are asset integration enabled on a different program.
Use the assign assets to multiple projects functionality when:
A summary project or program contains child projects that contribute transaction costs to the same asset.
A project is complete and the related asset is capitalized, and later additional costs are accumulated for the same asset in a new project.
You must disable integration on the project where the asset integration was previously completed.
Multiple work order-managed projects are set up to accumulate costs for the same asset over time or simultaneously.
Use the Assign Transactions to Assets page to assign transactions to assets for projects that have an asset identification rule of Manual Identification on the Asset Integration Rules page. You can also view transactions that are eligible for asset assignment.
The purpose of assigning transactions to assets is to specify the transaction costs to include in the cost basis of the asset that is created. The assign process stamps the asset management business unit, profile ID, and asset ID on the transaction row in the Project Transaction table. Alternatively, you can enter the asset management business unit, profile ID, and asset ID on the transaction row by performing one of the following functions:
Manually assigning transactions by using the Transaction Detail page.
Using the allocation process.
Using a system that feeds into PeopleSoft Project Costing.
Under certain circumstances you can add asset information into the feeder system; thus, transaction rows may already have these values populated. If this is the case, you do not have to reenter the asset information in PeopleSoft Project Costing.
In PeopleSoft Asset Management you can interunit transfer an asset from one business unit to create another asset in a different business unit. The transfer is recognized by the PeopleSoft Project Costing system if you subsequently try to adjust or retire the original asset in PeopleSoft Project Costing. In this situation the system detects the transfer, adds the new asset to PeopleSoft Project Costing, modifies the project to point to the new asset, and processes the adjustment or retirement on the new asset. The original asset is no longer available for you to adjust, retire, or relate it to a project.
For example, assume that Asset 1 was created from PeopleSoft Project Costing and sent to PeopleSoft Asset Management as Asset 1. Then Asset 1 was interunit transferred to create Asset 2. If you enter an adjustment for Asset 1 in PeopleSoft Project Costing, the system adds Asset 2 to Project Costing tables and applies the adjustment to Asset 2. In this example, you can no longer select Asset 1 to adjust or retire, and Asset 2 is eligible for asset capitalization and retirement processes.