FAQ On Depreciation

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1.    What is unplanned depreciation?
     Answer: Unplanned depreciation is a feature used primarily to comply with special depreciation accounting rules in Germany and the Nederlands. However, you also can use this feature to handle unusual accounting situations in which you need to adjust the net book value and accumulated depreciation amounts for an asset without affecting its cost. Oracle Assets immediately updates the YTD and LTD depreciation and the net book value of the asset. The unplanned depreciation expense you enter must not exceed the current net book value (Cost - salvage value - accumulated depreciation) of the asset.

2.  Can depreciation be suspended for a specified period of time?
     Answer: Depreciation can be suspended at any time by changing the depreciate flag on the book form to No. Note that the total depreciation to be taken over the life of the asset (including that incurred in periods the flag was set to No) will still be taken over the original life assigned to the asset. If the asset was added with the depreciate flag set to No, missed depreciation will be caught up in the period the flag is changed to Yes. If the asset was added with the depreciate flag set to Yes and the flag was later changed to No, the missed depreciation will be caught up in the last period of the assets ORIGINAL life; suspending depreciation will not extend the period over which the asset is depreciated.
3.  Can depreciation expense be manually input to override the system?
     Answer: Depreciation reserve adjustments can be made to a tax book. From release 10.7, with unplanned depreciation you may manually override the depreciation amount taken in the corporate book. The depreciation amount cannot be greater than the net book value of the account.
4.  How does the 'Depreciate When Placed In Service' flag on my prorate convention affect the calculation and allocation of depreciation?
     Answer: With the exception of the method type 'Calculated Straight Line', depreciation for the year is calculated based on the prorate date which maps to a prorate period and rate on the prorate calendar.  This total amount is then allocated back to the individual periods in the year.  If this flag is set to 'No', the years depreciation will be spread over the periods beginning with the prorate date. If the flag is set to 'Yes' , the years depreciation will be spread over the periods beginning with the date placed in service.  Note that total depreciation for the year remains unchanged, only depreciation per period will differ.
When the method type calculated straight line is used, this flag has no effect. Yearly depreciation will be calculated as recoverable cost/life, and allocated beginning with the prorate date.

5.  GAAP defines two types of changes; changes in estimates which are to be handled prospectively and errors which are to be retroactively corrected.  What Oracle functionality addresses these?
     Answer: Expense an adjustment for correction of an error, amortize the adjustment for a change in estimate.

6.  How do I set up Oracle Assets to charge a half month's depreciation in the first and last periods of the assets life?
     Answer: You must do the following:
1.  Set up a prorate CALENDAR with semi-monthly periods. So your prorate calendar will have 24 periods per fiscal year.
Eg:
Period 1: Jan 01 - Jan 15
Period 2: Jan 16 - Jan 31
Period 3: Feb 01 - Feb 15
Period 4: Feb 16 - Feb 28
Period 5: Mar 01 - Mar 15 ...
2.   Set up a prorate CONVENTION that maps the appropriate dates to the middle of the month.
       Eg:
Jan 01 - Jan 31 map to Jan 16
Feb 01 - Feb 28 map to Feb 16
Mar 01 - Mar 31 map to Mar 16 ...
3.  Assign your book to the appropriate Prorate calendar in the book controls form. (You will also probably want it to depreciate EVENLY)
4. Set the default prorate convention to the appropriate mid month convention in the Default Depreciation Rules zone of the Asset Categories form. You can also specify the prorate convention in the Books window during the detail additions process.
Now when the depreciation program processes an asset whose date placed in service is Jan 10, it will use the prorate convention to map that date to a PRORATE DATE of Jan 16, and it will use the prorate date to map to PRORATE PERIOD #2 in your prorate calendar. Thus, if you are running depreciation for January (note that your DEPRECIATION CALENDAR can still be monthly), you will get half a month's worth of depreciation for January.
*** It is not enough to set the porate convention to a mid-month convention -
you must also set the prorate CALENDAR to be semi-monthly
. ***

7.  What is the difference between the new What-if feature and the old depreciation
projections functionality?

     Answer: Using'What If Analysis, you can model depreciation scenarios for any number of future periods based on depreciation attributes different from what you have currently set up for the asset.  Hence the name: 'What If Analysis'.
Using 'Depreciation Projection', you can project depreciation expense based on the asset's current depreciation method, life, etc.
Additionally, 'What-If Analysis' is very flexible in allowing you to select a subset of assets for analysis. Selection criteria include Range of Asset Numbers, Range of Dates Placed in Service, Asset Category etc.  For  'Depreciation Projections', you must specify a BOOK and the program selects all active assets for that book.

8.  When I run depreciation I get
      "Error: function fafbgcc returned failure (called from fadoflx) Getting account CCID"   How do I correct this problem?

     Answer: Set the profile options PRINT_DEBUG and FA:DEPRN SINGLE to 'Yes' and re run depreciation. Note down the asset number and distribution id.  Depreciation tries to build a Code combination id for one of the following:
Asset Cost Account/CIP Cost Acct (Current Period Asset Clearing Account)/CIP Clearing Acct (Current Period Adds) Depreciation Expense Account (Prior Period Additions)
Check whether  dynamic insert is Yes or No.  If it is 'No' set it to 'Yes' in the flexfields screen. If it is already set to 'Yes' that means the combination generated is not valid. To find out what combination is being generated do the following : 
  • Find out which category the asset belongs to. (using Asset workbench).
  • Go to category books form and find the account segment value and CCIDs for Asset Cost Account &Asset
    Clearing Account or (CIP Cost Acct/CIP Clearing Account if the asset is CIP).
  • Find out the default CCID for the book from Books Screen.
  • Find out the distribution CCID (only if it is prior period addition).
Now run the script faxagtst.sql and see what combination is getting built
9.  What depreciation methods are supported within Oracle Assets?
     Answer: You may choose from the following:
  • Straight-line
  • Declining balance
  • Sum of year's digits
  • Units of production
  • ACRS and MACRS
  • Flat rate
  • Diminishing value
  • Bonus depreciation

10.  When should I run the depreciation program?
     Answer: In release 11i you can run depreciation any number of time but without checking the close period checkbox.In release 11 You should run depreciation when you are ready to close your depreciation period.
In release 11i depreciation can be roll backed as many number of time untill close period check box is checked. In release 11,Depreciation CANNOT be rolled back once run. Since the depreciation program closes the period, you should make sure that you entered all your transactions for the current period. If you forget to enter a transaction in the current period, you can enter a retroactive addition, transfer, or retirement transaction in the following period. Oracle Assets will not calculate adjustments to depreciation until you run depreciation again.
If you are closing the last period for a fiscal year, you cannot enter a retroactive retirement for a period after the end of the year.



11.  How often can I run depreciation?
     Answer: In release 11i you can run deprecaition any number of times untill you run depreciation with close period checkbox checked. While in release 11 You can run depreciation only once per depreciation period. When you run depreciation and close the period, you CANNOT reopen that period. You must run depreciation for EACH corporate and tax book; Oracle Assets does not run depreciation automatically for a tax book when you run depreciation for the associated corporate book. Run Mass Copy to update your tax book prior to running depreciation for the tax book.

12.  What happens if I run depreciation when there are retirements or reinstatements pending?
     Answer: When you submit depreciation, the process automatically runs the gain/loss program to calculate gains and losses for any pending retirements. You also can run the gain/loss program independently in order to reduce depreciation processing time. 

13.  What is the difference between depreciation projections and depreciation?
       Answer: Depreciation projections use a completely separate set of modules than the Depreciation program uses. Depreciation projections do not take into account adjustments entered in the current period, so any new retirements, transfers, or adjustments are not taken into account. Projections simply take a snapshot of the asset at the start date of the projection and project depreciation expense based on that information.

14.  What happens if depreciation encounters an error? How do I proceed?
       Answer: If the depreciation program encounters an error, the program will stop and perform a rollback to the previous commit. The program automatically resets the DEPRN_RUNNING_FLAG to NO. If the error is straightforward, such as "Out of rollback segments", you can try to correct the error and then resubmit the depreciation program. If the error is more serious, such as an operating system error, you should call Support before taking any further actions.




15.  What can I do to reduce processing time for the depreciation program?
       Answer:
  • Run gain/loss at several times throughout the period (you can run the gain/loss program as often as you want). Then, when you finally run depreciation, the gain/loss program will process only a few retirements or reinstatements instead of many.
  • Ensure that your tables are not fragmented. Ask your database administrator to check for fragmentation problems. If fragmentation exists, export and reimport the tables,or recreate them.

16.  How does the depreciation program handle the end of a fiscal year?
       Answer: At the end of a fiscal year, the depreciation program runs a short module to prepare Oracle Assets for the next fiscal year. This module runs automatically during the depreciation program.  The fiscal years program runs if the current period is the last period in the fiscal year. This occurs when the period number of the current period = NUMBER_PER_FISCAL_YEAR in the table FA_CALENDAR_TYPES. The fiscal years program checks if there are rows defined for the next fiscal year in FA_DEPRN_PERIODS, FA_FISCAL_YEAR, FA_CALENDAR_PERIODS, and FA_CONVENTIONS. If rows do not already exist, the fiscal years program creates them.