3Asset Books

This chapter contains the following:

You can set up an unlimited number of independent asset books. Each book has its own set of depreciation rules, accounts, and calendars to organize and implement your fixed assets accounting policies more effectively. You must set up your asset books before you can add assets to them.

An asset can have different financial information and depreciation rules in each book. For example, you can make the asset cost in your tax book different from the cost in the associated corporate book. Because the books are independent, you can run depreciation for each book on a different schedule.

In Oracle Fusion Assets, user access to the data is secured at the asset book level. Each user can view and update the assets only in the asset book to which they have access.

While defining your asset books you need to select the reference data set for the following set up and lookup objects:

  • Bonus Rules

  • Depreciation Ceilings

  • Depreciation Methods

  • Descriptions

  • Prorate Convention

  • Queue Name

  • Retirement Type

  • Unplanned Type

While defining these set up and lookup objects, you need to use the same reference data set value that you assigned to the book for which these are created. While adding an asset or performing any transaction on an asset in the book, you will see only the setup object values that share the reference data set with this book.

Before you can set up an asset book, you must have completed setting up the following:

  • Define ledgers

  • Define asset accounts

  • Define system controls

  • Define fiscal years

  • Define calendars

  • Define prorate conventions

  • Define reference data sets

You can define the following types of asset books:

  • Corporate

  • Tax

Corporate Books

An asset can belong to any number of tax books, but must belong to only one corporate book. New or existing assets must first be added to a corporate book and then can be easily copied to all the associated tax books.

You can set up multiple corporate books that create journal entries for different ledgers, or for the same ledger. In either case, you must run depreciation and create journal entries for each book. For each corporate book, you can set up multiple tax books and associate all of them to the corporate book.

Tax Books

A tax book must be associated with a corporate book so that the assets and transactions are easily copied from the corporate book. This helps to maintain multiple accounting and depreciation representations for assets with minimal effort.

Tax books can have different calendars than their associated corporate books, as long as both calendars uses the same fiscal year. You can use the tax rules to control what transactions need to be copied from the corporate book to the tax book.

You can associate the tax book to ledger of its corporate book or to a different ledger. You can also optionally create journal entries and transfer to your general ledger. The different ledger must be a secondary ledger of the ledger assigned to the corporate book and the following conditions must be satisfied:

  • Enable Oracle Fusion Subledger Accounting and set Use Primary Ledger Amounts to No in the accounting options of the secondary ledger setup.

  • Enable Assets for Subledger Accounting for the secondary ledger.

Create a Corporate Book

This example shows how to create a corporate book in Oracle Fusion Assets.

Create a Corporate Book

  1. Navigate to the Manage Books page.

  2. Click the Create icon.

  3. On the Create Book page, complete the fields as shown in this table:

    Field Value

    Name

    INF USA CORP

    Description

    InFusion USA Corporate Book

    Book Class

    Corporate

    Note: When you define a corporate book, the name of the corporate book you are defining is populated automatically into the Associated Corporate Book field.

    Ledger

    InFusion USA PL

    Depreciation Calendar

    MTH CAL

    Note: The Fiscal Year Name is populated automatically.

    Prorate Calendar

    MTH CAL

    Current Period

    Enter the current month and year.

    Divide Depreciation

    Evenly

    Last Depreciation Run

    Enter the last date of the previous month.

  4. Check the following check boxes:

    • Depreciate if retire in the first year

    • Allow amortized changes

    • Allow cost sign changes

    • Allow ledger posting

  5. In the Accounts region, enter the following account information:

    Field Value

    Enter Account Defaults

    101.10.78990.000.000.000

    Net Book Value Retired Gain

    78530

    Net Book Value Retired Loss

    78540

    Proceeds of Sale Gain

    78510

    Proceeds of Sale Loss

    78520

    Proceeds of Sale Clearing

    15930

    Cost of Removal Gain

    78530

    Cost of Removal Loss

    78540

    Cost of Removal Clearing

    24220

    Deferred Depreciation Expense

    68800

    Deferred Depreciation Reserve

    16800

  6. In the Rules region, Reference Data Groups tab, accept the default Reference Data Set Code for all reference data objects.

  7. In the Rules region, Group Rules tab, check all check boxes.

  8. Click Save and Close.

  9. Click Done.

Create a Tax Book

This example shows how to create a tax book in Oracle Fusion Assets.

Create a Tax Book

  1. Navigate to the Manage Books page.

  2. Click the Create icon.

  3. On the Create Book page, complete the fields as shown in this table:

    Field Value

    Name

    INF USA TAX

    Description

    InFusion USA Tax Book

    Book Class

    Tax

    Associated Corporate Book

    INF USA CORPORATE

    Ledger

    InFusion USA PL

    Depreciation Calendar

    QUARTER CAL

    Note: The Fiscal Year Name is populated automatically.

    Prorate Calendar

    MTH CAL

    Current Period

    Enter the current month and year.

    Divide Depreciation

    Evenly

    Last Depreciation Run

    Enter the last date of the previous month.

  4. Check the following check boxes:

    • Depreciate if retire in the first year

    • Allow amortized changes

    • Allow cost sign changes

    • Allow ledger posting

  5. In the Accounts region, enter the following account information:

    Field Value

    Enter Account Defaults

    101.10.78990.000.000.000

    Net Book Value Retired Gain

    78530

    Net Book Value Retired Loss

    78540

    Proceeds of Sale Gain

    78510

    Proceeds of Sale Loss

    78520

    Proceeds of Sale Clearing

    15930

    Cost of Removal Gain

    78530

    Cost of Removal Loss

    78540

    Cost of Removal Clearing

    24220

    Deferred Depreciation Expense

    68800

    Deferred Depreciation Reserve

    16800

  6. In the Rules region, Reference Data Groups tab, accept the default Reference Data Set Code for all reference data objects.

  7. In the Rules region, Group Rules tab, check all check boxes.

  8. In the Tax Rules region, check the Allow mass copy check box.

  9. Click Save and Close.

  10. Click Done.

A fiscal year is a standard set of periods used to prepare annual financial statements for reporting and tax purposes.

Fiscal years:

  • Usually represent twelve monthly periods, but this varies by business and country.

  • Can also be referred to as a financial year or a budget year.

When setting up fiscal years, you need to:

  • Define the start date and end date for each of your fiscal years starting from the earliest date placed in service through at least one fiscal year beyond the current fiscal year.

  • Define at least one calendar for each fiscal year to break the fiscal year into multiple report periods, such as months.

Note: Depreciation fails if the current fiscal year is the last fiscal year you set up.

Multiple Fiscal Years

You can set up multiple fiscal years and assign different fiscal years to your different corporate books to meet the various reporting and tax requirements.

Tax Books

A corporate book and all its associated tax books can use the same fiscal year or a different fiscal year. In other words, the calendar for a tax book can use the same fiscal year or a different fiscal year as the calendar for its associated corporate book.

Calendars break down your fiscal year into accounting periods. Define your calendars with as many periods as necessary for your reporting and tax regulation requirements. Each book you set up requires a depreciation calendar and a prorate calendar. You can use one calendar for multiple depreciation books and as both the depreciation and prorate calendar for a book.

Corporate books can share the same calendar. A tax book can have a different calendar than its associated corporate book. The calendar for a tax book can use the same fiscal year or a different fiscal year as the calendar for its associated corporate book.

Note: You must initially set up all calendar periods from the period corresponding to the oldest date placed in service to the last day of the current fiscal year. You must set up at least one period before the current period. At the end of each fiscal year, Oracle Fusion Assets automatically sets up the periods for the next fiscal year.

Define calendars according to your needs. For example, to define a 4-4-5 calendar, set up your fiscal years, depreciation calendar, and prorate calendar with different start and end dates, and fill in the uneven periods. You can divide annual depreciation proportionately according to the number of days in each period or evenly in each period.

Before you can set up a calendar, you must have completed setting up the following:

  • System controls

  • Fiscal years

Depreciation Calendar

The depreciation calendar determines the number of accounting periods in your fiscal year.

Note: If you assign the depreciation calendar to a book from which you create journal entries and transfer it to your general ledger, you must set up your depreciation calendar with the same period names you set up in your general ledger.

Prorate Calendar

The prorate calendar determines what rate Assets uses to calculate annual depreciation by mapping each date to a prorate period, which corresponds to a set of rates in the rate table.

The Depreciation process uses the prorate calendar to determine the prorate period that's used to choose the depreciation rate.

Create an Asset Calendar

This example shows how to create a monthly calendar in Oracle Fusion Assets.

Create an Asset Calendar

  1. Navigate to the Manage Calendars page.

  2. Click the Create icon.

  3. On the Create Calendar page, complete the fields as shown in this table.

    Field Value

    Name

    MTH CAL

    Description

    Monthly Calendar

    Fiscal Year Name

    FIS YR

    Periods per Year

    12

    Period Suffix

    Calendar

  4. Click the Add Row icon.

  5. In the Periods region, enter information for the first period as shown in this table:

    Field Value

    Period Name

    JAN-12

    Period Number

    1

    Start Date

    1/1/12

    End Date

    1/31/12

  6. Click the Add Row icon to enter another period.

    Note: The values for Period Number, Start Date, and End Date are entered automatically. You only need to enter the first three letter of the month in the Period Name field: FEB.

  7. Continue adding periods until you have entered all 12 periods.

  8. Click Save and Close.

  9. Click Done.

Oracle Fusion Assets uses prorate and retirement conventions to determine how much depreciation to take in the first and last year of an asset's life.

To determine depreciation, set up:

  • Prorate conventions

  • Retirement conventions

Prorate Conventions

Define prorate conventions to determine depreciation in the first and last year of an asset's life, based on when you place the asset in service. Since assets can be acquired at any time in a given period, prorate conventions must account for every date in the fiscal year for assets to depreciate properly. The prorate convention and the date placed in service determine the prorate date. Assets uses the prorate date to determine the prorate period in your prorate calendar.

Note: You must initially set up all your prorate conventions from the convention period corresponding to the oldest date placed in service through the end of the current fiscal year. At the end of each fiscal year, Assets automatically sets up your prorate conventions for the next fiscal year.

Assets prorates the depreciation taken for an asset in its first fiscal year of life according to the prorate date. For example, if you use the half-year prorate convention, the prorate date of all assets using that convention is simply the midpoint of your fiscal year. So assets acquired in the same fiscal year take the same amount (half a year's worth) of depreciation in the first year. If however, you use the following month prorate convention, the prorate date is the beginning of the month following the month placed in service, so the amount of depreciation taken for assets acquired in the same fiscal year varies according to the month they were placed in service.

Your reporting authority's depreciation regulations determine the amount of depreciation to take in the asset's first year of life. For example, some governments require that you prorate depreciation according to the number of months you hold an asset in its first fiscal year of life. In this case, your prorate convention has twelve rate periods, one for each month of the year. Other reporting authorities require that you prorate depreciation according to the number of days that you hold an asset in its first year of life. This means that the fiscal year depreciation amount would vary depending on the day you added the asset. Thus, your prorate convention contains 365 prorate periods, one for each day of the year.

Retirement Conventions

If you do business in a country that requires you to use a different prorate convention for retirements than for additions, set up retirement conventions to determine how much depreciation to take in the last year of life, based on the retirement date.

If you retire the asset before it is fully reserved, then Assets uses the prorate date from the retirement convention to determine how much depreciation to take in the asset's last year of life.

Overview of Capitalization Threshold Amounts

You can specify capitalization threshold amounts to automatically capitalize assets based on the defined capitalization threshold. Optionally specify the low value threshold amount for each asset category so that these low value assets are fully reserved using the specified method and life.

Threshold Types

Threshold types determine how the Prepare Asset Transaction Data process performs capitalization validation.

Threshold Type Description

Asset Cost

Total cost of the asset or source line is compared with the capitalization threshold limit.

For example, in 2018 a company with a capitalization threshold of $5000 purchased seven pieces of asset X at $4,400 each, for a total cost of $30,800. The company now wants to create a single asset with seven units. Since the total cost of the asset ($30,800) is greater than the threshold of $5000, the asset type will be Capitalized.

Unit Cost

Per unit cost of the asset is compared with the capitalization threshold limit.

Using the previous example, since the per unit cost of the asset ($4,400) is less than the threshold limit of $5000, the asset type will be Expensed.

Threshold Amounts

You can specify two types of threshold amounts.

  • Capitalization Threshold

    The Capitalization threshold specifies the minimum cost of an asset to be eligible for automatic capitalization. If the asset cost is less than the capitalization threshold, the asset is automatically expensed.

  • Low Value Threshold

    The Low Value threshold specifies the maximum cost of an asset that is considered to be a low-value asset. A low value asset is an asset that needs to be capitalized but it must also be fully depreciated either in the period of acquisition or in the first year of life.

Assets are capitalized using a Low Value Asset depreciation rule if the asset cost is equal to or more than the capitalization threshold, but less than the low value threshold.

For example, if the Capitalization threshold is $3,000 and the Low Value threshold is $5,000:

  • Asset cost is less than $3,000: Asset is Expensed

  • Asset cost is between $3,000 and $4,999.99: Low value asset will be fully depreciated in the period of addition

  • Asset cost is $5,000 or more: Asset is Capitalized

Enable Capitalization Thresholds

Before you can add capitalization thresholds, you need to update your setup so that capitalization threshold fields are visible on the Advanced Rules tab on the Manage Books page.

To enable the Advanced Rules tab:

  1. Go to Setup and Maintenance > Setup: Financials > Fixed Assets > Manage Fixed Assets Lookups.

  2. Search for: Lookup Type: ORA_FA_ALLOW_CAP_THRESHOLD.

  3. Click the Create icon in the Financials Generic Lookup Type: ORA_FA_ALLOW_CAP_THRESHOLD section.

  4. Complete the fields as shown in this table:

    Field Value

    Lookup code

    Your book name

    Reference Data Set

    Common Set

    Display Sequence

    1

    Enabled

    Check the check box

    Start Date

    Today's date

    Meaning

    Your book name

    Description

    A meaningful description

Set Capitalization and Low Value Thresholds

Go to Setup and Maintenance > Setup: Financials > Fixed Assets > Manage Asset Books > Advanced Rules tab.

  1. Enter the capitalization threshold type:

    • Cost: When you select this value the total cost of the asset or source line is compared with the capitalization threshold limit.

    • Unit: When you select this value the per unit cost of the asset is compared with the capitalization threshold limit.

  2. Enter the capitalization threshold amount. The capitalization threshold amount is the lowest amount an asset should cost to be capitalized. Assets with a cost that is less than this amount will be expensed.

  3. Enter a low value threshold amount. Low value assets are assets that need to be capitalized, but must be fully depreciated either in the period of acquisition or in the first year of life. If the low value threshold isn't required for your setup, enter the same amount for the capitalization threshold and the low value threshold.

  4. Click Save.

Set Low Value Asset Depreciation Rules for Categories

You can also specify threshold amounts by category if you need different threshold amounts for different categories.

Note: If you specify threshold amounts by category, the category threshold amounts override the threshold amounts defined for an asset book.
  • Navigate to: Setup and Maintenance > Setup: Financials > Fixed Assets > Manage Asset Categories> Select a category > Edit > Accounting Rules section > Default Rules tab.

  • In the Low Value Asset section of the Edit Category page, enter the capitalization threshold amount, low value threshold amount, depreciation method, life, and prorate convention.

  • Click Save.

Validate Capitalization Threshold Results

If you use capitalization thresholds, you need to validate the thresholds after you add assets.

Here's how:

  1. Add assets using the Mass Additions File-Based Data Import template or from Payables.

  2. Navigate to Assets -> Additions Infotile -> Actions -> Prepare Additions Automatically.

  3. Run the Prepare Asset Transaction Data process. This process determines whether to expense or capitalize assets, based on the specified threshold values.

  4. After the Prepare Asset Transaction Data process completes, view the validation results in the Edit Source Line page.

Best Practices for Working with Threshold Validation Results

After you run the Prepare Asset Transaction Data process, check the validation results and make any necessary updates.

  • Note whether the Evaluation check box is enabled:

    • Enabled: validation is complete

    • Not enabled: no validation was done for that line

  • You can continue to make changes to a source line after threshold validation, but the threshold validation can't be done again.

  • If the threshold validation process identifies an asset addition line as low value asset, it automatically enables the Low value asset check box in the Financial Details tab in the Edit Source Line page. The process also enters the depreciation method and prorate convention specified for low value assets in the category default rules.

    You can update the check box, depreciation method, and prorate convention, but the threshold validation can't be done again for this line.

  • If you perform a cost adjustment immediately after you add an asset, the cost of the asset may be greater than or less than the capitalization threshold. Assets doesn't automatically change an asset to a low value asset or low value asset to a non-low value asset. You decide whether to change it to a non-low value asset or to continue to treat it as a low value asset.

  • To change an asset to a non-low value asset, perform an adjustment transaction to disable the Low value check box and change the depreciation method. This change is treated as a normal depreciation method change and depreciation will be recalculated.

  • For a tax book, the Mass Copy process evaluates the capitalization and low value thresholds. The process copies the transaction from the corporate book to the tax book, regardless of whether the asset type is the same in the corporate and tax books.