Fixed Asset Accounting (FA)

 

Assets:

Asset Addition :

The process of adding a Fixed Asset either through detailed, quick or mass addition is called asset addition. Detail and quick addition are carried out only in Oracle Assets. 

The journal entry in Oracle Assets during detailed or quick addition is

Dr. Asset Cost

Cr. Asset clearing account

Asset clearing account is used to reconcile the transactions between Oracle Payables and Oracle Assets. When an asset is added through detailed or quick additions, the credit goes to the asset clearing account. Also for mass addition process, oracle assets use Asset Clearing account for reconciliation.

In Oracle Assets the journal entry remains the same

Dr. Asset Cost

      Cr. Asset clearing account

In AP

Dr Asset Clearing Account

Cr Accounts Paya

Changes:

Changes refer to change in Asset Cost or Depreciation method or Depreciation rate for one or more assets. Oracle Assets would use the new cost or depreciation method or rate from the period of change to arrive at the depreciation amount. Also it recalculates the depreciation that should have been calculated so far, compares with the actual depreciation and passes an adjusting entry.

If the transaction results in addition to the cost of asset, then the journal entry created is

Dr. Asset Cost

Cr. Asset Clearing

Hence an adjusting entry to incorporate depreciation as per the new cost of the asset should be incorporated. Also due to change in method or rate the new depreciation calculated may be lower or greater than the depreciation calculated so far.

 

If the accumulated depreciation recalculated is lower than the accumulated depreciation calculated until now,

Dr. Accumulated Depreciation

Cr. Depreciation Expense (Adjustment)

If it is greater than the Accumulated depreciation until now,

Dr. Depreciation Expense (Adjustment)

Cr. Accumulated Depreciation

Transfer 

Transfers refer to change in Location, expense account, and employee assignment. If there is a change in expense account, for e.g. If an asset is transferred from department 001 to department 002,

The journal entry for accounting the asset cost is

Dr. Asset Cost (002)

Cr. Asset Cost (001)

The journal entry for accounting the accumulated depreciation is

Dr. Accumulated Depreciation (001)

Cr. Accumulated Depreciation (002)

Revaluation

Revaluation is a process so as to reflect current market price of the Asset. The journal entry created by revaluing a fixed asset is as follows:

Revalue Accumulated Depreciation is enabled at the Book Controls level:

The amount of revaluation would be credited to Accumulated Depreciation and Revaluation reserve in the same proportion as the existing Accumulates Depreciation and Net Book value.

Dr. Asset Cost

      Cr. Accumulated Depreciation

      Cr. Revaluation Reserve 

Revalue Accumulated Depreciation is disabled at the Book Controls level:

To the extend of the revaluation amount, the following journal entry would be passed.

Dr. Asset Cost

      Cr. Revaluation Reserve 

Also the existing depreciation reserve would also be transferred to the Revaluation Reserve

Dr. Accumulated Depreciation

      Cr. Revaluation Reserve 

Retirements 

Oracle Assets passes the following journal entry for retirement.

If the retirement transaction resulted in a Gain, the journal entry passed would be. 

Dr. Accumulated Depreciation

Dr. Proceeds of sale

Cr. Asset Cost

Cr. Gain / Loss 

If the retirement transaction resulted in a Loss, the journal entry passed would be.

Dr. Accumulated Depreciation

Dr. Proceeds of sale

Dr. Gain / Loss

Cr. Asset Cost

Depreciation:

Running depreciation (as applicable to a particular asset) during the period end would pass a journal entry

Dr. Depreciation Expense

      Cr. Accumulated Depreciation