Accounting entries for the Asset Life Cycle

Asset Cost

Asset Clearing

Depreciation Expense

Accumulated Depreciation

Revaluation Reserve

Revaluation Amortization

CIP Cost

CIP Clearing

Proceeds of Sale Gain, Loss, and Clearing

Cost of Removal Gain, Loss, and Clearing

Net Book Value Retired Gain and Loss

Intercompany Payables

Intercompany Receivables

Deferred Accumulated Depreciation

Deferred Depreciation Expense

Depreciation Adjustment

The setup of these accounts is done while you defining the asset books as per
below. The number for above accounts can usually map it with Oracle seeded
screen of setup;.
Fig 1: Accounts and accounting in Fixed Assets

Fig 2: Accounts and accounting in Fixed Assets

Next we will see the different accounting at various transactional events.

Depreciation Accounting
Whenever you run depreciation, Oracle Assets creates accounting entry with your
accumulated depreciation accounts and your depreciation expense accounts. Oracle
Assets creates separate journal entries for current period depreciation expense and
for adjustments to depreciation expense for prior period transactions and changes
to financial information.

Oracle Assets creates the following journal entries for a current period depreciation
charge of AU$ 200:

Current and Prior Period Addition

Read this previous post on mass addition:

The recoverable cost is AU$ 4,000 and the method is straight-line 4 years. You
purchase and place the asset into service in Year 1, Quarter 1.

You place an asset in service in Year 1, Quarter 1, but you do not enter it into Oracle
Assets until Year 2, Quarter 2. Your payables system creates the same journal
entries to asset clearing and accounts payable liability as for a current period
addition.

Merge Mass Additions

When you merge two mass additions, Oracle Assets adds the asset cost of the mass
addition that you are merging to the asset account of the mass addition you are
merging into. Oracle Assets records the merge when you perform the transaction.
Oracle Assets does not change the asset clearing account journal entries it creates
for each line, so each of the appropriate clearing accounts clears separately.

Construction-In-Process (CIP) Addition

You add a CIP asset. (CIP assets do not depreciate )

Capitalization

Once you decide that a CIP asset is completed you can capitalize it very easily.

Navigation: Assets > Capitalize CIP Assets

A capitalization transaction is similar to an addition transaction: you place the asset

in service so you can begin depreciating it. When you capitalize an asset in the
period you added it, Oracle Assets creates the following journal entries:
When you capitalize an asset in a period after the period you added it, Oracle
Assets creates journal entries that transfer the cost from the CIP cost account to the
asset cost account. The clearing account has already been cleared.

Deleted Mass Additions

Oracle Assets creates no journal entries for deleted mass additions and does not
clear the asset clearing accounts credited by accounts payable. You clear the
accounts by either reversing the invoice in your payables system, or creating
manual journal entries in your general ledger.

Asset Type Adjustments

If you change the asset type from capitalized to CIP, Oracle Assets creates journal
entries to debit the CIP cost account and credit the asset clearing account. Oracle
Assets does not create capitalization or reverse capitalization journal entries for CIP
reverse transactions.

Cost Adjustments to Assets

Understand this way, you placed an asset in service in Year 1, Quarter 1. The
recoverable cost is AU$4,000. The life of your asset is 4 years, and you are using
straight-line depreciation. In Year 1, Quarter 4, you receive an additional invoice for
the asset and change the recoverable cost to AU$4,800.
Expense will go at it:

Amortized

Reinstatement

Current Period Reinstatement

Reclassification

Read these post for greatest

details Reclassification of assets

Asset Reclass Programmatically

When you reclassify an asset from office equipment to computers in Year 1, Quarter
3. The asset cost is AU$4,000, the life is 4 years, and you are using straight-line
depreciation
 Transfer Asset

Read this earlier post on asset transfer .

In Year 2, Quarter 2, you transfer the asset from cost center 100 to cost center 200
in the current period

In Year 3, Quarter 4, you transfer the asset from the ABC Manufacturing Company
to the XYZ Distribution Company.
you place the same AU$4,000 asset in service with two units assigned to cost
center 100. In Year 2, Quarter 3, you realize the asset actually has four units, two of
which belong to cost center 200. If all units remain in the original cost center,
Oracle Assets does not create any journal entries.