Generating Asset Lines

This topic introduces asset lines and offers a high-level description of the tasks associated with asset line generation.

What are asset lines, and why do we need them?

Asset lines are a consolidated grouping of project costs that are allocated to project assets. This allocation ensures that the project costs incurred while creating an asset are assigned appropriately. How these asset lines are grouped is defined by the asset line grouping method, and allocation of these grouped project costs to project assets is defined by the asset cost allocation method.

For example, when you work on a project, you typically secure materials and talent for the project in bulk; but when you finally want to allocate these costs to the actual assets that make up your project’s deliverables, it becomes important to associate a certain percentage of the bulk costs to each specific asset. Project asset lines help you do that.

Ideally, all project asset lines get assigned to project assets before these asset lines can be transferred to Oracle Assets. However, if you want to assign asset lines to project assets manually, choose the None asset cost allocation method. Then, the Generate Asset Lines process creates asset lines but doesn't attempt to allocate them to project assets. You will then need to manually assign these project asset lines to assets using the Projects > Assets UI or perform this task in bulk using the Unassigned Asset Lines FBDI or the REST API for Asset Lines. For larger volumes, you can build integrated Excel workbooks that utilize REST APIs. This is known as Visual Builder Add in for Excel (VBAFE).

What's the difference between project assets and Oracle Assets assets?

Oracle Assets assets represent actual assets in an organization. These are assets that get reported in the Fixed Assets section of the organization's balance sheet. Oracle Assets enables you to manage these assets and depreciate them over time.

Note: These assets will also include accumulated depreciation, which will allow you to determine the net book value of all your assets.

For example, there may be a line item on the balance sheet named Buildings. This would be a grouped listing of the cost of all buildings owned by your company. So, your company might report, say, $200,000,000 worth of buildings; Oracle Assets provides costing details for these, say, 175 buildings, which make up that summary cost.

It is important to note that not all assets that are listed in Oracle Assets are associated with projects. There are many assets that are directly purchased for the use of the organization, or acquired when an organization buys out another. Oracle Assets helps you manage all your assets, regardless of whether they were created using Oracle Projects or purchased directly from other applications, such as Oracle Payables.

A project asset, on the other hand, is a placeholder for accumulating all project costs that went into creating an asset. Now, when the project is completed, and all asset costs have been captured, the project asset records all the costs that went into creating it. Oracle Assets doesn't need that kind of detail; it just wants to know how much an asset cost in the end. Even after the project is over, you can enhance the asset and assign costs to it.

Projects creates accounting for construction-in-progress (CIP) assets, and Oracle Assets moves the CIP cost into a final asset account.

Why do you need Oracle Projects to create assets?

You need Oracle Projects to create assets only when you can't buy the asset outright and need to construct / assemble the asset from scratch. Oracle Projects helps you capture the costs that went into creating the asset, so these can be reviewed / audited whenever required. Oracle Assets doesn't capture that level of detail and is only concerned about the final cost of an asset. For example, Oracle Time and Labor doesn't send any data directly to Oracle Assets. Oracle Time and Labor sends time cards to Oracle Projects, which then groups them together and allocates them to assets.

How are asset lines generated?

Asset line generation involves two interconnected tasks:

  1. Project Costs Grouping: Enables you to group project costs.
  2. Asset Costs Allocation: Enables you to allocate grouped asset costs to project assets.

In simple terms, there can be thousands, if not millions, of project costs that need to be summarized to make them more manageable. Once these costs have been grouped together, we can allocate them to the designated project assets, which should share in the allocation of these costs.

Asset Line Generation: Example

For example, the boundary line tapes of a clay tennis court are made of vinyl and must be physically nailed into the clay. Typically, there are 1500 nails that are used to line one tennis court. Tennis court engineers obviously spend numerous hours to drive in all of these nails, and if a tennis club has 8 clay courts, they will require 12,000 nails to line all eight courts. So, let's say there is one person assigned per tennis court who lays out the tape, and there are two people per tennis court, who must drive the nails in. Completing the taping of each tennis court takes five hours.

Let's say these are the relevant costs associated with laying a boundary tape around one clay tennis court:

  • Cost of the vinyl tape: $1,000 per court
  • Cost of the tennis court nails: $500 per court
  • Labor costs for Tape Layer: $100 per hour. Two hours required per court for a cost of $200 per court.
  • Labor cost for Nail Gun Applicator: $50 per hour. Three hours required per court for a cost of $150 per court.
  • Hourly rental cost for the nail gun: $50 per hour. Three hours are required for the nail gun rental for a cost of $150 per court.

Here are the costs associated with lining one tennis court:

Costs for Lining One Tennis Court

Item Rate Time Cost per Court Time Required for Eight Courts Cost for Eight Courts
Vinyl Tape $1,000 per court NA $1,000 NA $8,000
Tennis Court Nails $500 per court NA $500 NA $4,000
Labor, Tape Layer $100 per hour 2 hours $200 16 hours $1,600
Labor, Nail Gun Applicator $50 per hour 3 hours $150 24 hour $1,200
Nail Gun Rental (1 per Court) $50 per hour 3 hours $150 24 hours $1,200
Totals $2,000 $16,000

To generate asset lines for this project, we first need to first group project costs that belong together by one or more specific rules of our choosing. Let's say we choose to group material and labor costs separately. We now have two heads of project costs instead of five:

  • Material Costs: The materials required to apply the lines to a clay tennis court is the vinyl tape, tennis court nails, and the use of the special nail gun. The average expected material cost is $1,650 per clay tennis court or $13,800 to lay out and install the tape in eight courts.
  • Labor Costs: The labor required to install these lines can be organized into two parts: Two hours for the Tape Layer, and three hours for the Nail Gun Applicator. The average expected labor cost is $350 per clay tennis court, or $2,800 to lay out and install the tape in eight courts.

We now need to allocate these costs to project assets. Since we know that the costs of material and labor for laying out each clay court is the same, we use the Spread Evenly asset cost allocation method. This means that each project cost shall be allocated evenly to each clay court. To learn more about this asset cost allocation method, see Asset Cost Allocation Methods.

Upon reviewing the process for preparing these eight tennis courts, the process is identical in terms of materials and labor required. The costs can be charged directly to a designated task defined for the respective tennis court, or the costs could collectively be captured and then allocated evenly to each of the eight tennis courts. This allocation could also apply to incidental costs that are not directly associated with any one of the tennis courts, such the tennis court supervisor overseeing installation on all eight tennis courts. This could also include the cost of trucks and lifts, which are rented and used for the entire project.

Now, say the labor costs come to $2,800, the vinyl tape and tennis court nails come to $12,000, and the rental for the nail guns comes to $1,200. This gives us a total project cost of $16,000. Because we chose the Spread Evenly asset cost allocation method, the cost allocated to each clay court shall be $16,000 / 8 courts or $2,000 per court.

Here's a table listing out the final set of grouped and allocated costs, which constitutes your asset lines:

Final Set of Grouped and Allocated Costs

Associated Project Asset Asset Line Description Asset Line Value
Clay Court 1 Material costs for Clay Court 1 $1650
Clay Court 1 Labor costs for Clay Court 1 $350
Clay Court 2 Material costs for Clay Court 2 $1650
Clay Court 2 Labor costs for Clay Court 2 $350
Clay Court 3 Material costs for Clay Court 3 $1650
Clay Court 3 Labor costs for Clay Court 3 $350
Clay Court 4 Material costs for Clay Court 4 $1650
Clay Court 4 Labor costs for Clay Court 4 $350
Clay Court 5 Material costs for Clay Court 5 $1650
Clay Court 5 Labor costs for Clay Court 5 $350
Clay Court 6 Material costs for Clay Court 6 $1650
Clay Court 6 Labor costs for Clay Court 6 $350
Clay Court 7 Material costs for Clay Court 7 $1650
Clay Court 7 Labor costs for Clay Court 7 $350
Clay Court 8 Material costs for Clay Court 8 $1650
Clay Court 8 Labor costs for Clay Court 8 $350
Total $16,000

The grouped project costs are now distributed and allocated to the appropriate project asset. These 16 lines of allocated cost are your 16 asset lines which, once they're transferred into Oracle Assets, will be associated with each tennis court separately.