What is Depreciation?
Procedure to use for calculating depreciation and create journals that will be posted to the General Ledger. This is also to be used to close the period.
The depreciation program calculates depreciation expense and adjustments, and updates the accumulated depreciation and year-to-date depreciation.
When we run depreciation, the depreciation program submits three separate requests to:
Calculate gains and losses for retired assets and catch up depreciation for retired and reinstated assets
Calculate depreciation expense and adjustments for the period, and close the current period
Run the reserve ledger report Depreciation expense is calculated as follows:
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Depreciation Expense = (Current Cost - Recoverable Cost) * Basic Rate< /FONT >
What is RollBack Depreciation?
This is used to reverse the following processes:
Calculated depreciation in Fixed Assets
Created journal in Fixed Assets
Posted journal in General Ledger
What is Forecast Depreciation?
Oracle Assets estimates depreciation expense for the periods for which you project depreciation based on the financial information for your existing assets at the start of that period. The projection includes additions, transfers, and reclassification transactions you perform in the
It ignores other asset transactions you make in the current period, such as the depreciation adjustment for retroactive additions and retroactive transfers you enter in the current period.
The program also ignores fully reserved and fully retired assets. Depreciation projections are estimates of actual depreciation expense. You can project depreciation expense for any depreciation book.
The standard depreciation process in EBS
Depreciation computations depend on such factors as the type of depreciation (Life, units of production, or flat rate), the depreciation life and the depreciation method.
The asset category specifies a default depreciation method to be used with an asset. You will usually want to set up categories in such a way that you do not need to override the defaults they establish.
This is oracle standard Depreciation Process.
Overview of the Process
Prior to running the Deprecation process you have to unsure that these reports submission is completed.
- Select Depreciation from the navigation menu and then select Calculate Gains and Losses. Here oracle Assets will automatically run this report when Depreciation is ran, but the forecast report will not be accurate if their are any retirements pending.
- Run the Projections report which will project depreciation expense for a specific depreciation book. Use this report to review project depreciation expense for your assets for each book you request. This report is sorted by, and prints the total depreciation for each balancing segment, cost center, and expense account. You can request asset detail at the Cost Center and/or Asset level.
Step 1.0 :Run depreciation on corporate book.
The depreciation program automatically calculates gains and losses for unprocessed retirements, calculates depreciation expense and depreciation adjustments, and generates the appropriate Reserve Ledger and Journal Entry Reserve Reports . Ensure that the close period box is unchecked. This 'trial' run enables an opportunity to review depreciation calculations and work any errors prior to running your final period depreciation.
Step 2.0 : Run Create Journal
This process creates all of the depreciation, transfer, reclassification, capitalization, addition, adjustment and retirement journal entries for all of the transactions within the asset sub-ledger. It also transfers these journals to the general ledger once they have been created.
Please take a note oracle Assets journals updated the GL tables rather than the GL interface tables.
Step 3.0 : Reconcile FA sub-ledger to the General Ledger and Accounts Payable
- Using the Period Close reports reconcile the FA Clearing, Cost and Depreciation amounts to the appropriate GL accounts.
- To reconcile the cost accounts with GL, you can run the cost summary and cost detail report. The summary report can only be sorted by balancing segment and asset account. A detail (by asset) version is also available for these reports.
- Depreciation expense reconciliation can be done using the Journal Entry Reserve Ledger report. This report provides details on all active assets in addition to those assets that you might have retired during the year.
- Run GL Accounts Analysis Report for details on GL transaction activities for reconciling any account balance discrepancies.
If we are happy with the reports we can go ahead to Run the Depreciation Process again (Step 4.0) otherwise, we will perform these processes;
- Sub Step 3.a Â· Rollback Journals
- Sub Step 3.b Rollback Depreciation
- Sub step 3.c Necessary adjustments and for rewind the whole process again
Step 4.0 :Run the Depreciation Process Again
Once you are satisfied with the reconciliation, the process with the close period box checked, the process closes the current depreciation period and opens the next period calendar.
Step 5.0 :Copy transactions to tax books
This process copies the transaction that occurred in the corporate book during a period to a tax book using the Periodic Mass Copy functionality as opposed to the Initial Mass copy.
The timing of the Periodic Mass Copy process will depend on what type of calendar has been assigned to the Tax Book. If it's Monthly, then the copy process should occur each month after the Corp Book is closed.
Step 6.0 :Run these reports for the verification of the Copy Process
The Tax Addition Report shows you asset additions and capitalization for the period range you selected. The report is sorted by Balancing Segment, Fiscal Year Added, Asset Account, and Asset Number. It prints totals for Asset Account, Fiscal Year, and Balancing Segment.
The Financial Adjustments Report shows you all of the adjustments you made to the financial information for your assets for the Book and Period you choose. Asset Number sorts the report and by when the transaction was effective.
The Tax Retirements Report shows you all the Gains and Losses and any Investment Tax Credit (ITC) Recapture for your asset retirements. This report sorts by Balancing Segment, Fiscal Year Placed in Service Date, Asset Account, and Asset Number. The report prints totals for each Fiscal Year and Balancing Segment.
These three reports provide all the details on Assets copied from Mass Copy.
Step 7.0 :Run depreciation on tax books.
Depreciation is calculated separately on each tax book according to the depreciation methods and life defined for each tax book. The same process for running tax depreciation applies as detailed in Step 1.0 discussed above.
Step 5 to 7 is required if your company is maintaining tax books, else this become optional.