How to run depreciation in Fixed Assets

As a rule asset price decreases as time goes by. The rate of price decrease depends on the type of asset. For instance machinery price decreases at a faster rate because of wear and tear whereas furniture price decreases at a slower rate. The process of price decrease is called depreciation.

At the end of every period the depreciated asset prices need to be entered into Oracle GL. Therefore the depreciation process has to be executed. This process is given below.

Step 1: Check the current period in FA

Navigation:

Query for the corporate book

Note the value of Current Period. It is May-12.

Step 2: Run depreciation

Navigation: Depreciation > Run Depreciation

Click on Book field

The current field is populated automatically.

Note: If you want to run depreciation and review the entries do not check the box named “Close Period”. If this box is checked the existing assets will be depreciated and the period will be closed.

Click on Run

You will get a popup message

Step 3: Check the requests

Navigation: View > Requests

First 2 requests are executed

1. Generate Accounts
2. Depreciation Run Request Set (Corporate Book – Open Period) (Report Set)

The 2^nd request, Depreciation Run Request Set executes the following requests

1. Calculate Gains and Losses
2. Depreciation Run
3. Journal Entry Reserve Ledger Report

Requests run,

1. Calculate Gains and Losses
2. Generate Accounts
3. Depreciation Run Request Set (Corporate Book – Open Period) (Report Set)
4. Calculate Gains and Losses
5. Depreciation Run
6. Journal Entry Reserve Ledger Report

At the end of the depreciation run the requests will look like the following,

Check the output of the report, Journal Entry Reserve Ledger Report.

The sample output in text format

ETIHAD AIRWAYS Journal Entry Reserve Ledger Report Report Date: 04-OCT-2012 10:09

Currency: AED Period: May-12 Page: 1 of 333

Book: EY_CORP

Company: 11

Expense Account: 5461

Reserve Account: 1881

Cost Asset- Date Placed Deprn Life Depreciation Year-To-Date Depreciation

Centre Description In Service Method Yr.Mo Cost Amount Depreciation Reserve Percent

------ ----------------- ----------- ------- ------- ----------------- ---------------- ---------------- ----------------- -------

711 13778-AIRFRAME OF 09-JUN-2006 STL 20.00 230,731,688.49 524,822.04 2,624,110.20 39,659,208.51 100.00

13779-AIRFRAME OF 15-SEP-2006 STL 20.00 233,745,804.66 511,777.35 2,558,886.75 36,220,168.04 100.00

13780-AIRFRAME OF 27-FEB-2006 STL 20.00 263,788,076.07 934,249.44 4,671,247.20 70,186,448.79 100.00

13781-AIRFRAME OF 29-MAR-2006 STL 20.00 264,598,300.17 937,118.98 4,685,594.90 69,477,744.42 100.00

13782-AIFRAME OF 13-JUL-2006 STL 20.00 231,362,493.47 521,045.09 2,605,225.45 38,511,031.53 100.00

13783-AIRFRAME OF 20-JUN-2006 STL 20.00 265,510,259.85 940,348.59 4,701,742.95 67,151,253.50 100.00

13784-AIRFRAME OF 24-APR-2006 STL 20.00 264,176,145.58 935,623.58 4,678,117.90 68,567,174.62 100.00

13785-AIRFRAME OF 29-JUN-2006 STL 20.00 265,059,625.28 938,752.84 4,693,764.20 66,759,472.49 100.00

13786-MSN 34597 A 29-JAN-2006 STL 20.00 262,242,673.49 928,776.14 4,643,880.70 70,660,779.46 100.00

13787-AIRFRAME OF 24-NOV-2006 STL 20.00 283,723,695.38 1,004,854.68 5,024,273.40 66,570,952.08 100.00

13788-AIRFRAME OF 21-DEC-2006 STL 20.00 236,026,671.60 499,908.42 2,499,542.10 32,805,989.05 100.00

13789-MSN 34598 A 27-FEB-2006 STL 20.00 263,177,066.24 932,085.44 4,660,427.20 70,023,876.42 100.00

13790-MSN 34599- 29-MAR-2006 STL 20.00 263,557,189.42 933,431.71 4,667,158.55 69,204,371.37 100.00

13791-MSN-34600- 20-APR-2006 STL 20.00 264,065,489.31 935,231.94 4,676,159.70 68,661,398.11 100.00

13792-MSN-34601- 16-MAY-2006 STL 20.00 264,483,835.12 936,713.58 4,683,567.90 67,969,477.29 100.00

13793-AIRCRAFT EN 29-JAN-2006 STL 20.00 174,706,826.89 618,753.35 3,093,766.75 47,074,415.53 100.00

13794-AIRCRAFT EN 27-FEB-2006 STL 20.00 175,153,181.15 620,334.18 3,101,670.90 46,603,242.75 100.00

13795-AIRCRAFT EN 29-MAR-2006 STL 20.00 175,153,181.15 620,334.18 3,101,670.90 45,991,406.29 100.00

13796-AIRCRAFT EN 20-APR-2006 STL 20.00 175,930,173.36 623,086.03 3,115,430.15 45,744,757.11 100.00

13797-AIRCRAFT EN 16-MAY-2006 STL 20.00 175,930,173.36 623,086.03 3,115,430.15 45,212,146.59 100.00

13798-AIRCRAFT EN 27-FEB-2006 STL 20.00 33,696,767.75 119,342.72 596,713.60 8,965,744.37 100.00

13799-AIRCRAFT EN 29-MAR-2006 STL 20.00 34,345,194.95 121,639.23 608,196.15 9,018,299.28 100.00

13800-AIRCRAFT EN 24-APR-2006 STL 20.00 34,675,043.00 122,807.44 614,037.20 8,999,935.02 100.00

13801-AIRCRAFT EN 20-JUN-2006 STL 20.00 34,801,164.07 123,254.12 616,270.60 8,801,695.03 100.00

13802-AIRCRAFT EN 29-JUN-2006 STL 20.00 34,801,164.06 123,254.12 616,270.60 8,765,225.32 100.00

13803-AIRCRAFT EN 24-NOV-2006 STL 20.00 40,282,474.48 142,667.10 713,335.50 9,451,597.49 100.00

13804-AIRCRAFT EN 09-JUN-2006 STL 20.00 206,892,455.66 469,959.09 2,349,795.45 35,509,925.58 100.00

13805-AIRCRAFT EN 13-JUL-2006 STL 20.00 207,516,936.46 466,693.79 2,333,468.95 34,491,120.53 100.00

13806-AIRCRAFT EN 15-SEP-2006 STL 20.00 209,541,769.71 458,170.11 2,290,850.55 32,416,116.78 100.00

13807-AIRCRAFT EN 21-DEC-2006 STL 20.00 211,471,982.77 447,235.68 2,236,178.40 29,341,177.15 100.00

…

…

…

…
Currency:  AED                                            Period:  May-12                                   Page:    332  of     333
Book:  EY_CORP
Company:  31
Expense Account:  5676
Reserve Account:  1888

Cost   Asset-            Date Placed Deprn     Life                        Depreciation     Year-To-Date      Depreciation
Centre Description       In Service  Method   Yr.Mo               Cost           Amount     Depreciation           Reserve Percent
------ ----------------- ----------- ------- ------- ----------------- ---------------- ---------------- ----------------- -------
622    23567-Black Berry 26-OCT-2009 TRACK_S     .01          2,395.00             0.00             0.00          2,395.00  100.00
                                                     ----------------- ---------------- ---------------- -----------------
       Cost Centre 622 Totals:                                2,395.00             0.00             0.00          2,395.00

                                                     ----------------- ---------------- ---------------- -----------------
Account 5676/1888 Totals:                                     2,395.00             0.00             0.00          2,395.00

                                                     ----------------- ---------------- ---------------- -----------------
Company 31 Totals:                                        1,704,616.48        26,287.07       135,385.35        966,831.69

Report Totals:                                       22,801,479,171.36   111,318,002.83   557,492,688.66  4,774,929,001.79

                                                                                                            Page:    333  of     333

P = Partial unit retirement
F = Full retirement
T = Transfer out
N = Non-depreciating asset
R = Reclass
B = Bonus Depreciation Amount

+---------------------------------------------------------------------------+
End of log messages from FND_FILE
+---------------------------------------------------------------------------+

Step 4: Check depreciation of assets

Let us take 1 asset from the previous report. Say asset 13778, i.e. the first asset on the report.

Navigation: Assets > Asset Workbench

Enter the asset number and the book name.

Click on Find button

The asset header details are shown. Click on Financial Inquiry button.

You can see the depreciation history of the asset. In this way you can review individual assets.

Step 5: Transfer the depreciation entries to GL

We need to execute the program, “Create Journal Entries“

Navigation: Journal Entries > Standard

The SRS form opens and the program name is populated automatically. Enter the book name and the period.

Submit this request

We set that the Journal Import is also executed as we had set the value of parameter, Run Journal Import, to Yes.

Check the output of Create Journal Entries program

Standard Journals Execution Report

Book: EY_CORP

Period: May-12

GL Period: 

Level: N

Import to GL: Y

CJE ID: 231341

 Group ID: 55933

At end of posting routine ---- Depreciation

Group ID: 55934

At end of posting routine ---- Addition

Group ID: 55935

At end of posting routine ---- Adjustment

Group ID: 55936

At end of posting routine ---- Transfer

Group ID: 55937

At end of posting routine ---- Reclass

Group ID: 55938

At end of posting routine ---- Retirement

Group ID: 55939

At end of posting routine ---- CIP Addition

Group ID: 55940

At end of posting routine ---- CIP Adjustment

Group ID: 55941

At end of posting routine ---- CIP Transfer

Group ID: 55942

At end of posting routine ---- CIP Reclassification

Group ID: 55943

At end of posting routine ---- CIP Retirement

Group ID: 55944

At end of posting routine ---- Revaluation

Group ID: 55945

At end of posting routine ---- Depreciation Adjustment

Concurrent Request 19094825 submitted.

Number of successes: 13

Number of failures: 0

Program FAPOST completed successfully

Check the output of Journal Import

In text format

ETIHAD SET OF BOOKS                               Journal Import Execution Report                              Date: 04-OCT-12 10:53

Concurrent Request ID: 19094825                                                                                Page:               1

                                                   Total   Total   Total Total Unbalanced Total Unbalanced Total Flex Total Non-Flex

Journal Entry Source Name       Group Id Status    Lines Batches Headers          Batches          Headers     Errors         Errors

---------------------------- ----------- ------- ------- ------- ------- ---------------- ---------------- ---------- --------------

Assets                             55933 Success     708       1       1                0                0          0              0

                                                 ------- ------- ------- ---------------- ---------------- ---------- --------------

*** TOTALS ***                                       708       1       1                0                0          0              0

=======================================================   Batches Created   ========================================================

                                                                               Total   Total               Total               Total

Warning Batch Name                                               Period Name   Lines Headers    Accounted Debits   Accounted Credits

------- -------------------------------------------------------- ----------- ------- ------- ------------------- -------------------

        Depreciation EY_CORP/231341 Assets 19094825: A 55933     May-12          708       1        111318002.83        111318002.83

=================================================   Unbalanced Journal Entries**   =================================================

Error                                                                            Total

Code  Journal Entry Name                    Batch Name                           Lines Period Name     Total Debits    Total Credits

----- ------------------------------------- ------------------------------------ ----- ----------- ---------------- ----------------

=========================================================   Error Lines   ==========================================================

We see that 1 journal has been created in GL with batch name as “Depreciation EY_CORP/231341 Assets 19094825: A 55933“

Step 6: Review the journal in GL

Responsibility: GL responsibility

Navigation: Journals > Enter

Enter the batch name, Depreciation EY_CORP/231341 Assets 19094825: A 55933. (This is the batch name that has been generated by Journal Import program in the previous step)

Click on Find

You can view the journal by clicking on Review Journal

You can review the journal created for depreciation.

Step 5: Rollback depreciation

If you want to make adjustments on the assets then you need to roll back the entries that have been generated for the depreciation run.

Navigation: Journal Entries > Rolback Journal Entries

Clicking on the function automatically brings up the SRS window with the program, “Rollback Journal Entries“.

On the parameter window, enter the book name and the period will be populated automatically. The period will be automatically selected and it will be the last period for which depreciation was run.

Submit the request

When the program ends the depreciation journal has been reversed. Check the log file.

+---------------------------------------------------------------------------+

Assets: Version : 11.5.0

Copyright (c) 1979, 1999, Oracle Corporation. All rights reserved.

FAJERB module: Rollback Journal Entries

+---------------------------------------------------------------------------+

Current system time is 04-OCT-2012 11:18:54

+---------------------------------------------------------------------------+

**Starts**04-OCT-2012 11:18:55

**Ends**04-OCT-2012 11:18:55

+---------------------------------------------------------------------------+

Start of log messages from FND_FILE

+---------------------------------------------------------------------------+

Processing existing batch to be deleted: Depreciation EY_CORP/231341 Assets 19094825: A 55933

Batch deletion successful: Depreciation EY_CORP/231341 Assets 19094825: A 55933

Program FAJERB completed successfully

+---------------------------------------------------------------------------+

End of log messages from FND_FILE

+---------------------------------------------------------------------------+

You can see in the log file that the batch has been deleted. If you check in General Ledger for this journal you will not find it.

Step 8: Close the Asset period

After making all the adjustments on the assets we shall run depreciation once again and close the period as well.

Navigation: Depreciation > Run Depreciation

Select the book and the latest period. Check the box, Close Period.

Click on Run

A popup warning message is displayed. Click on OK

The same programs will be executed as discussed in step 2. 1 additional program is executed as we checked “Close Period“. This program name is, Process Pending Transactions.

Step 9: Check Book Controls

Navigation: Asset System > Book Controls

Query for the corporate book

Note that the current period has been changed to Jun-12 now as the previous period, May-12, has been depreciated and closed.

Cheers!

Related articles

• Open or Close Periods in Oracle Apps (oraclemaniac.com)