Oracle Apps 11i : Asset Management - Depreciation

In this tutorial you will learn about Asset Management - Depreciation ; a) Elements, b) Basic depreciation calculation, c) Calculate Annual Depreciation, d) Allocate Annual Depreciation across Periods, e) Spreading Depreciation across Expense Accounts, f) Methods, g) Run-Depreciation, h) Closing a Depreciation Period and i) Programs

Depreciation

a) Elements

Define corporate, tax, and budget asset books. Define the corporate book first to associate it with multiple tax and budget books. Oracle Assets provides many standard depreciation methods. Set up additional methods if required.

b) Basic depreciation calculation

Prorate date Oracle Assets prorates the asset depreciation in its first fiscal year of life according to the prorate date. Upon initial asset entry, it calculates the prorate date based on the date placed in the service and asset prorate convention.

Depreciation Rate Oracle Assets calculates depreciation based on recoverable cost or recoverable net book value. It uses the prorate date to choose a prorate period from the prorate calendar.

c) Calculate Annual Depreciation

Calculated and table-based methods calculate annual depreciation by multiplying the depreciation rate by the recoverable cost or net book value as of the beginning of the fiscal year.

Flat- rate methods calculate annual depreciation as the depreciation rate multiplied by the recoverable cost or net book value, multiplied by the fraction of year the asset was held.

d) Allocate Annual Depreciation across Periods

After calculating the annual depreciation amount, Oracle Assets uses your depreciation calendar, the divide depression flag, and then depreciate when placed in service to determine how much of the fiscal year depreciation to allocate to the period for which you ran depreciation.

e) Spreading Depreciation across Expense Accounts

Finally, Oracle Assets allocates the periodic depreciation to the assignments you made for the asset. It does this according to the fraction of the asset units that is assigned to each depreciation expense account in the Assignments window.

f) Methods

Figure 1. Navigate to define Depreciation method.

Figure 2. Define the Depreciation methods.

Figure 3. Define Depreciation formula.

You depreciate assets by using several types of depreciation methods that Oracle Assets supports. You also create periodic journal entries for each book to the GL. As an asset depreciates, its net book value approaches the salvage value. Oracle Assets is delivered with many seeded depreciation methods:

Life-based
Flat-rate
Units of Production

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