How You Capitalize Fixed Assets Upon Purchase Receipt to Inventory Destination

Earlier, you could manually establish a relationship between a fixed asset and an installed base asset. In addition, you could systematically create an installed base asset and capitalize it as a fixed asset for nonproject purchases with a receipt destination type of expense, and automatically establish a relationship between the installed base asset and the associated fixed asset without any manual intervention.

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 inventory. This automatically establishes a relationship between the installed base asset and the associated fixed asset without any manual intervention. This functionality lets you to capitalize your asset as soon as it's received in your inventory.

This functionality supports multiple business units and multiple currencies. For example, you can create a purchase order in a Canadian business unit and Canadian currency. The corresponding cost distribution amount and fixed asset cost can be in both Canadian currency and United States currency.

To accomplish this, perform the following steps:

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 Inventory
   • Select the Accrue At Receipt item set up.
   • Select your subinventory
3. Submit the purchase order for approval.
4. After successful procurement of the item, process receipt of the item into the inventory organization defined in the purchase order.
   • • Transfer Transactions from Receiving to Costing
     • Transfer Transactions from Inventory to Costing
     • Transfer Costs to Cost Management
     • Create Receipt Accounting Distributions
     • Create Cost Accounting Distributions
     • Create Accounting
5. Review Cost Accounting Distributions and verify that your transactions are fully costed and accounted.
6. Ensure an installed base asset role is assigned to your user, and run this scheduled process:
   • Transfer Receipts to Mass Additions
7. Ensure a fixed asset role is assigned to your user.
   • Check the Mass Additions data and enter the following:
     • In-service date
     • Location
     • Amount
   • Run the Post Mass Additions scheduled process to create a fixed asset for your received item.
   • 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.
8. Ensure an installed base user role is assigned to your user and run the Connect Fixed Asset to Operational Asset scheduled process. On the Fixed Asset tab of the Edit Asset user interface, you can see the fixed asset associated with your installed base asset.
9. Create an invoice for the received item by providing information in the Create Invoice user interface.
   • Add the required information, such as Number, Amount, Type, and Invoice Group.
   • Search for your purchase order and select the purchase order number.
   • You can update your item’s amount, and any additional information such as Freight and Miscellaneous. If applicable, these can be prorated across the Purchased Item quantities.
   • Calculate tax, validate your invoice, and post the invoice to ledger tasks.
10. After invoicing, ensure the costing role is assigned to your user.
11. Run the following scheduled processes:
    • Transfer Transactions from Receiving to Costing
    • Transfer Transactions from Inventory to Costing
    • Transfer Costs to Cost Management
    • Create Receipt Accounting Distributions
    • Create Cost Accounting Distributions
    • Create Accounting
12. Review the cost accounting distributions. Verify that your transactions are fully costed and accounted.
13. With the installed base asset role assigned to your user, run the Transfer Receipts to Mass Addition scheduled process.
14. With the fixed asset role assign to your user:
    • Check the Mass Additions data and enter the following:
      • In-service date
      • Location
      • Amount
    • Run the Post Mass Additions scheduled process and verify that the fixed asset is created.
    • Review the cost accounting distributions and ensure your transactions are fully costed and accounted.
      • These 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 inventory 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.
      • Only the nonrecoverable portion of 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.
      • When accounting for your invoice in accounts payable, you can also transfer any invoice price variance for your item and tax lines to fixed assets.
      • The invoice price variance is the quantity invoiced multiplied by the difference between the invoice unit price and the purchase order unit price.