Asset Capitalization

Using capital projects, you can define capital assets and capture construction–in–process (CIP) and expense costs for assets you are creating. When you are ready to place assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle Assets for posting as fixed assets.

You can also define retirement adjustment assets and capture cost of removal and proceeds of sale amounts (collectively referred to as retirement costs, retirement work–in–process, or RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your retirement activities are complete, you can generate asset lines for the RWIP amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group asset that corresponds to each asset.

Capital Projects for Capital Assets
You define and build capital assets in capital projects using information specified in the project work breakdown structure (WBS). You define asset grouping levels and assign assets to the grouping levels to summarize the CIP costs for capitalization.
You can review and adjust capital project costs before and after capitalization. For example, you can allocate costs collected under common tasks to multiple CIP assets before you place them in service. You can also account for additional costs incurred after capitalization, since Oracle Projects allows you to place assets in service before
completion of a project.

When a CIP asset is ready to be placed in service, you send the capital project amounts to Oracle Assets as asset lines. Oracle Assets places the asset lines in a holding area where your fixed assets department can post the capital costs in Oracle Assets as fixed assets. You can review detail transactions associated with the asset lines in Oracle Projects and Oracle Assets. If necessary, you can reverse capitalize an asset in a capital project.

Capital Projects for Retirement Costs
You capture retirement costs in a capital project by recording cost of removal and proceeds of sale amounts to a task that is designated as a retirement cost task. To distinguish cost of removal and proceeds of sale amounts, you must enter proceeds of sale amounts using expenditure types that you define to specifically classify these amounts.
Oracle Projects automatically classifies amounts for all other expenditure types as cost of removal.

To associate retirement costs with a group asset in Oracle Assets, you create a retirement adjustment asset in the capital project and identify it with a specific group asset. As with capital assets, you define asset grouping levels and assign retirement adjustment assets to the grouping levels to summarize the retirement cost amounts for posting
to Oracle Assets.

When retirement activities are complete, you generate asset lines for the retirement cost amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group assets. To communicate notice of an asset retirement to Oracle Assets, you can optionally initiate retirement requests in Oracle
Projects that are automatically passed to Oracle Assets.

Attention: To use Oracle Projects retirement cost processing windows and features, the value of the site–level profile option PA: Retirement Cost Processing Enabled must be set to Yes.

Oracle Applications Fusion Cloud - Inventory

Oracle Cloud/Fusion Procurement training will help you develop the fundamental skills required to set up and use the Procurement module. This training covers all the tasks, setups, forms and reports used in Procurement and related modules