How You Capitalize Fixed Assets Upon Purchase Receipt to Expense Destination

Earlier, you could manually establish a relationship between a fixed asset and an installed base asset. With this update, you can now systematically create an installed base asset and capitalize it as a fixed asset for nonproject purchases with a receipt destination type of expense. A relationship between the installed base asset and the associated fixed asset is automatically established without any manual intervention. This functionality allows you to capitalize your asset as soon as it's received.

To accomplish this, perform the following steps:

Note: To enable this feature, create the purchase order after the cutoff date. The cutoff date is set after at the feature opt in date task execution.

1. Create a purchase order in Oracle Fusion Cloud Procurement.
   • Select the required parameters that includes business unit, supplier, and supplier site.
2. When adding purchase order line items, ensure you provide the following parameters:
   • Set the destination type to Expense
   • Select the Accrue At Receipt item set up.
   • Enter PO account a other mandatory attributes to create the Purchased Order
     • Item Price if this is not derived from item definition
     • Quantity
     • Request Delivery Date
     • Location
     • PO Charge Account
     • User defined Fiscal – Classification (Optional)
       • Invoice Tolerance Percent (Option and if User defined Fiscal – Classification is selected )
3. Submit the purchase order for approval and make sure your purchase order is set to the Open status.

   After successful procurement of the item, process receipt of the item into the inventory organization defined in the purchase order.

4. Provide the required values as per the item’s definition, including serial number, lot number, item quantities, and so on.
5. Now when the costing role is assigned to your user, run the following scheduled jobs to process costing balances and distributions for the purchase order:
   • • Transfer Transactions from Receiving to Costing
     • Create Receipt Accounting Distributions
     • Run the Create Accounting process for your receipt, and post it to the General Ledger
     • Transfer Receipts to Mass Additions
6. Ensure a fixed asset role is assigned to your user by navigating to Fixed Asset, Asset user interface.
7. Prepare the newly created source lines for your receipt in the Fixed Asset Corporate Book.
8. Edit your source line user interface:
   • Queue: Post
   • Category: Select one
     Note: Specify the Asset Category on your Item Definition; Oracle will default the Asset Category in your mass addition line within Fixed Assets. If the asset category is not set up on the item master, Oracle will try to match the natural account segment of your PO Charge account with the Asset Clearing account on your asset category definition. If a match is found, Oracle will default this asset category on the mass addition lines.
   • In Service Date : Enter one within Open Period Month.
   • Depreciation Expense Account : Select One
   • Location : Select One.
     Note: You can default the location for your mass addition lines transferred from receiving, if you configure your mapping between your fixed assets location and your ship-to location.
   • Run the Post Mass Additions scheduled job to create a fixed asset for your received item.
9. Ensure an installed base user role is assigned to your user and run the Connect Fixed Asset to Operational Asset scheduled job to complete the first step of the fixed asset and installed base asset integration.
10. Create an installed base asset and a fixed asset using this feature.
    • In service date for your fixed asset, it will be the goods receipt date on the receipt.
    • Oracle Fusion Cloud defaults the asset type as Capitalized, if it's greater than the capitalization threshold that you have specified for your asset book.
    • When the line is posted and a new asset is created, Oracle Fusion Cloud further adds costs to this asset as an adjustment using the Add to Asset feature of Fixed Assets.
    • On the Fixed Asset tab of the Edit Asset user interface, you can see the fixed asset associated with your installed base asset.
11. Create an invoice for the received item by providing information in the Create Invoice user interface. You can update your item’s amount, and any additional information such as, Freight and Miscellaneous.
12. Run the following scheduled jobs to process the updates to the fixed asset and costing distribution:
    • Transfer Costs to Cost Management
    • Create Receipt Accounting Distributions
    • Create Accounting
    • Transfer Receipts to Mass Additions
13. With the fixed asset role assign to your user, run the Post Mass Additions scheduled job to create a fixed asset for your received item.
14. The following additional charges can appear as an Expense Adjustment transaction type on your accounting distribution:
    • You can transfer any costs such as the purchase order cost for your items and your estimated taxes at receipt and transfer them to Fixed Assets for capitalization.
    • After you enter and account for the invoice for this receipt, you can transfer any adjustments to the asset. These include freight charges, miscellaneous charges and taxes that are prorated to the item distribution from which the asset was created earlier. Any unallocated and nonprorated charges wouldn't be transferred to fixed assets via Receiving.
    • Only nonrecoverable portion of the taxes gets transferred to fixed assets as capitalized cost.
    • You can't transfer payment discounts to fixed assets for such invoices. You must apply such discounts manually to your fixed assets.
    • You can also transfer any invoice price variance for your item and tax lines to fixed assets, when you account for your invoice in Accounts Payables. The invoice price variance is the quantity invoiced multiplied by the difference between the invoice unit price and the purchase order unit price.