Tuesday Jan 12, 2016

Unplanned Depreciation in Fixed Assets

Unplanned depreciation is used in Fixed Assets to handle unusual accounting situations in which the net book value (NBV) and accumulated depreciation amounts for an asset need to be adjusted without affecting the asset cost.

There are some rules for using unplanned depreciation.  These include:

  • You cannot allocate unplanned depreciation amounts to specific distributions, as you can in a distribution set.
  • You cannot make expensed adjustments to assets for which you have previously entered unplanned depreciation and have since amortized the amount.Calculator
  • You can apply unplanned depreciation to assets using flat rate or units of production methods, in addition to straight line methods.
  • You cannot perform a mass change or prior period retirement for assets that have unplanned depreciation.
  • If you have run preliminary depreciation and then enter unplanned depreciation, the unplanned transaction functions as a rollback event.  Therefore, you cannot use unplanned depreciation as a negative adjustment of depreciation in the period of addition.
  • Unplanned depreciation can only be entered if you are using a table based or flat rate method.  For an asset using some other type of method, you will have to change the method first.

To enter an unplanned depreciation, navigate to the Asset Workbench:

1.  Select the asset for which you want to enter unplanned depreciation and click the Books button.

2.  In the Books window, enter a book.

3.  Enter a reason for the unplanned depreciation in the Comments field as needed.

4.  When you navigate to the Depreciation zone, you will see that the amounts will pop up. Click the Unplanned Depreciation button.

5.  In the Unplanned Depreciation window, select the unplanned depreciation type.

6.  Enter the unplanned amount as a positive or negative currency.

7.  Enter the unplanned depreciation expense account.

8.  Select the Amortize From Current Period check box. Leave this box clear if you want to amortize the remaining net book value in a subsequent period.  [The value of this check box overrides the value of the Amortize Adjustments check box in the Books window.]

9.  Click Done to save your work.

For additional information, view the document:  Unplanned Depreciation In Oracle Assets (Doc ID 114298.1).


Friday May 29, 2015

Depreciation Calculation Considerations in Fixed Assets

There are many variables that can affect the depreciation calculation for an asset.  Some of the basic variables include: 

  • Cost Financial Inquiry
  • Depreciation method
  • Date Placed in Service (DPIS)
  • Prorate convention
  • Prorate date

You can view these variables for an asset via the Financial Inquiry form and make changes to these via the Asset Workbench / Books form.

Additional factors in the calculation of depreciation for an asset include:

  • Specifics of the depreciation method
  • Depreciation calendar
  • Depreciate when placed in service flag
  • Dividing depreciation evenly or by days
  • Other specifics of the prorate convention
  • Prorate calendar

Some of the factors that seem to cause more confusion than others surround the allocation (divide evenly or by days) setting on the Book Controls form and the the prorate information.

If the book is set to divide depreciation evenly, the annual depreciation for the assets will be divided evenly over the number of periods in the fiscal year.  If the book is set to divide daily, the annual depreciation will be divided based on the number of days of the periods in the fiscal year, with the amount of depreciation varying in each period.  For sample calculations of depreciation using "Divide Depreciation By Days" (the less common scenario), review the Depreciation Methods White Paper found in Fixed Assets Depreciation Methods and Calculations With Examples (Doc ID 1179655.1).  There are a number of examples using different parameters, starting on page 25.  Look for those that use "Depreciation Allocation" = "Daily."

For prorates, the prorate calendar determines the number of prorate periods in your fiscal year.  The depreciation program uses the prorate calendar to determine the prorate period, which is used to determine the annual depreciation amount.  The prorate convention is used to determine how much depreciation to take in the first and last years of the asset's life.  Together with the date placed in service (DPIS), the prorate convention helps to determine the prorate date.  For example, if you use a prorate convention with a defined period of 1-JUN-2015 to 30-JUN-2015 and a corresponding prorate date of 30-JUN-2015, an asset with a DPIS of 16-JUN-2015 will start depreciating in the current month of June.  If the prorate convention, instead, is set to a defined period of 1-JUN-2015 to 30-JUN-2015 with a prorate date of 01-JUL-2015, an asset with a DPIS of 16-JUN-2015 will start depreciating in the following month of July.  Thus, the prorate date is tied to the DPIS, but the DPIS might not be when the asset starts depreciating.  Examples of varying prorate setups can be found in the white paper in The Wonderful World of Prorate Conventions White Paper (Doc ID 115323.1) 

Thursday Apr 03, 2014

New Log Analyzer for Depreciation Error Logs

We have a new depreciation error log analyzer for Fixed Assets.  This new tool can be found in the document:  Log Inspector: Assets Depreciation (FADEPR) Terminated in Error (Doc ID 1626908.1).  When your depreciation process has terminated in error, you can use this tool to explore possible causes and find solutions. The Log Inspector will step you through the process. 

When you first view the Log Inspector document, you can select the link to view a short presentation about the use of the tool.  When you are ready to access the tool, you first select your release 12.0.x, 12.1.x, or 12.2.x.  Then select "Next."

The Log Inspector presents the second screen to you.  You will paste the contents of your depreciation error log file into the blank entry field.  When you select "Next," the Inspector will process the information provided to obtain a possible solution.

Error log

In this example, the depreciation error log was pasted into the Log Inspector's window, "Next" was selected, and the Inspector returned a solution:

Solution

The next time you encounter an error when running the depreciation process, consider utilizing the Log Inspector for analysis of the issue.  

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