Though Reclassification of Financial assets is just a function in Oracle asset, but have larger impact in reporting side for disclosure requirement.
Reclassification and mass reclassification
Reclassification of an asset is simply changing the category of an asset.
Mass Reclassification is a feature that allows you to reclassify a group of assets from one asset category to another based on flexible selection criteria. Your flexiable flexible selection criteria may be either inherit the depreciation rules of the new category or retain depreciation rules of the old asset category. Also you have an option for an option to choose to amortize or expense any depreciation adjustment resulting from the reclassification. sounds Good:)
Why its needed
In Fixed asset module majority of time all assets are tracked for long-term assets. Time to time certain information needs to be changed as asset level thus reclassification serves the purpose of asset maintenance by enabling managers of the asset system to change asset details efficiently. so far i can figure out only two major reason which make qualifying for reclassification:
- Change asset accounting information
- Change asset depreciation information
How many way you can do reclass:
Oracle Assets also allows you to reclassify assets using any of the following methods:
- Asset Workbench: This option you can use the Asset Workbench to manually reclassify individual assets( it is just fliping the category).
- Mass Change: You can use the Mass Change process to reclassifying groups of assets selected by one or more ranges.
- Reclassification API : If you have large number of asset,you can use API, see the details in following discussion.
- You cannot reclass an asset in a prior period and future period.
- You cannot reclass fully retired assets
- You cannot reclass asset associated with inactive employee.
This is applicable for both CIP and capitalize asset
The Process of Reclassify of Financial Assets
Navigation: Asset -> Asset Workbench
From the Asset form, click on the Open option in the bottom of the form. From the Asset Details form ,place cursor in the category field and
proceed to change the category or you can mass reclassification.
Reclassification Changes that Affect Accounts
Oracle Assets updates the depreciation expense account and transfers the cost and accumulated depreciation and reserve associated with the asset to the new category. In this process the depreciation rules which consist of Method , EUL and convention nothing get changed.
Depreciation expense already taken remains in the account associated with the old category. The system will charge current depreciation expense according to the newly defined category.
Oracle Assets creates journal entries for the asset by using the accounts associated with the new category, including the depreciation expense account only in subsequent period, where no accounting entry get created in the period when it was added and reclassified
Asset Cost CR
Accumulated Depreciation DR
Asset Cost DR
Accumulated Depreciation CR
You reclassify an asset from office equipment to computers in Year 1, Quarter 3. The asset cost is $4,000, the life is 4 years, and you are using straight-line depreciation
Oracle have two major report for Reclassification.
- Asset Reclassification Report
- Mass Reclassification Preview Report :The Mass Reclassification Preview Report shows you the effect of the mass reclassification criteria you specified will have on your assets.
- Asset Reclassification Reconciliation Report
These Oracle tables directly or indirectly involved with Reclassification or mass reclassification.
- The FA_MASS_RECLASS table stores asset selection and reclass criteria for mass reclassification requests.
- The FA_MASS_RECLASS_ITF stores report results for Mass Reclass Preview
- FA_BOOK_CONTROLS table stores the depreciation book information assigned to assets to be reclassed.
- FA_ADDITIONS table stores parameters for additions created by mass reclassification process.
- FA_TRANSACTION_HEADERS & FA_DISTRIBUTION_HISTORY
- FA_CATEGORIES table is referenced for asset category information.
- FA_ASSET_KEYWORDS stores asset information classified by FA_MASS_RECLASS.
What happen during the Reclassification
When you re-class an asset in the same period it was added, the following tables get updated
When you re-class an asset after the period it was added, Oracle Assets updates the following tables:
When you next run depreciation, the following tables are updated: