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The right partner makes all


the difference.

Fixed Asset Solution for Dual GAAP


Ledgers Using Oracle Release 12
Standard Functionality
By: Jeanne Cooper
Sr. Oracle Financials Consultant
AST Corporation
September 19, 2014

Applications Software Technology Corporati on

1755 Park Street, Suite 100 | Naperville, Illinois 60563 | 1.888.278.0002 | www.astcorporation.com

Contents
ABSTRACT..............................................................................1
INTRODUCTION .....................................................................2
FIXED ASSETS BUSINESS SCENARIO ......................................... 2
SETUP REQUIREMENTS ......................................................... 2
HIGH LEVEL SOLUTION .......................................................... 3
ACCOUNTING PROCESS FLOW ................................................ 4
ACCOUNTING MANAGER SETUPS FOR SECONDARY LEDGER .... 7
FIXED ASSET BOOKS SETUP..................................................... 9
ASSET CATEGORIES .............................................................. 11
HOW TO CAUSE 100% DEPRECIATION IN THE SAME MONTH AN ASSET
IS ADDED TO ORACLE ASSETS ............................................... 16
CONCLUSION ....................................................................... 27

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page i

Abstract
Oracle Accounting Setup Manager is the new configuration tool for
accounting setups in General Ledger for Oracle E-Business Suite R12.
The Accounting Setup Manager can also be used to control the flow of
Journal Entries from the Primary Ledger journal entries to secondary
ledger for Fixed Assets Subledger, only using the Subledger accounting
options for secondary ledger.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 1

Introduction
This paper provides information to help familiarize users with some
implementation options to control the flow of Fixed Asset Journal entries
as a solution for dual GAAP ledgers. It will also describe the journal
entry flow from Fixed Assets to the appropriate Ledger. The necessary
setups within the Accounting Setup Manager, Fixed Asset setups for
Fixed Asset Book, and Asset Categories will also be provided in detail.

Fixed Assets Business Scenario


Company XYZ has a business requirement where Assets should be
depreciated based upon local and corporate depreciation schedules and
journal entries created from both schedules should be uploaded into
appropriate ledgers.
For example: for fixed assets in China there are different depreciation
schedules based upon China GAAP and US GAAP. Assets costed
between $250 and $2499 are recognized in China GAAP while in US
GAAP, these items are expensed.
To allow the business to perform the Asset Accounting per GAAP rule,
Oracle R12 Account Setup Manager allows setups where flow of Asset
journal entries can be controlled to a specific ledger.
The solution stated below meets the US GAAP and China GAAP
requirements by using the standard Oracle R12 functionality, and meets
dual GAAP scenarios including CHINA, KOREA and INDIA.
This paper describes the solution based on the CHINA scenario using the
standard R12 functionality.

S ETUP R E QUIREMENTS
Primary Ledger US GAAP with PRC COA
Secondary Ledger PRC GAAP with PRC COA
Fixed Asset Corporate Book pointed to Primary Ledger
Fixed Asset Tax Book based upon Corporate Book pointed to
Secondary Ledger
Use Accounting Setup Manager to switch off the flow of
Primary Ledger journal entries to secondary ledger for Fixed
Assets Subledger only using the Subledger accounting options
for secondary ledger

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 2

H IGH L EVEL S OLUTION

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 3

Accounting Process Flow


The following journal entries depict the accounting flow from Purchase
Order/Requisition until the item reaches the appropriate ledger. Two
accounting flows are displayed: the first for items from 250 to 2,500
USD; the second for items greater than 2,500 USD.
A. Solution for an Asset between the Value of USD 250 and 2500
(250 < 2500 USD)
PO / Requisition will enter the Asset with an Asset Clearing Account in
the Charge Account Field for all the USD values between 250 and
2499.99:
AP will match the Invoice to PO
o FA Clearing A/C DR
o AP Liability A/C CR
(The above journal entry will post to the Primary Ledger)
Mass Additions Create will run and the Asset will be sent to the
FA Mass Additions Table of the FA Corporate Book.
FA Accountant will process the Asset in Mass Additions;
selecting a location and a special asset category
FA Accountant will post the Mass Additions to Fixed Assets.
o Asset Cost A/C DR
o FA Clearing A/C CR
(Mass Additions journal entries will be created in the Primary
Ledger)
Transfer the Asset to the FA Tax Book by running Periodic Mass
Copy. Update the depreciation life in FA Tax book for the Asset
based upon Local GAAP depreciation schedules, if necessary.
** The above step is a process change as Periodic Mass Copy
normally is run after Depreciation.
FA Accountant verifies the life of the Asset, in the Corporate
Book is 1 month.
Run Depreciation for the FA Corporate Book. The asset will be
100% depreciated based upon the life of the Asset of 1 Month.
o
o

Expense Account Dr. (cheat the system as Depreciation


Expense Account)
Asset Cost A/C CR (cheat the system as Accumulated
Depreciation Account)

(**The above journal entry will only go to the Primary Ledger


since the Corporate Book is pointed to the Primary Ledger and
the transfer to secondary journal entries for Assets is switched
off.)

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 4

Run Depreciation for the FA Tax Book. The asset will be


depreciated per Local GAAP Depreciation schedules.
o
o

Depreciation Expense A/C DR


Accumulated Depreciation A/C CR

(The above journal entry will be created in the Secondary


Ledger; depreciation journal entries will be created every month
until the asset is fully depreciated. The Tax book is pointed to
the Secondary Ledger.)
The above Journal entries in Blue text will post to the Primary Ledger.
The journal entries in Green italicized text will post to the Secondary
Ledger.

B. Solution for an asset equal to or greater than USD 2500 (>=2500


USD)
PO / Requisition will enter the Asset with an Asset Clearing
Account in the Charge Account Field.
AP will match the Invoice to PO
o
o

FA Clearing A/C DR
AP Liability A/C CR

Mass Additions Create will run and the Asset will be sent to the
FA Mass Additions Table of the FA Corporate Book.
FA Accountant will process the Asset in Mass Additions;
selecting location and a normal asset category.
Post Mass Additions to Fixed Assets
o
o

Asset Cost A/C DR


FA Clearing A/C CR

(Mass Additions journal entries will be created in the Primary


Ledger)
Transfer the Asset to the FA Tax Book by running Periodic Mass
Copy. The Tax book will be maintained per Local GAAP
Depreciation schedules.
** The above step is a process change as Periodic Mass Copy
normally is run after Depreciation.
o

Run Depreciation for the FA Corporate Book. The asset will


depreciate per US depreciation methods.
o Depreciation Expense A/C DR.
o Accumulated Depreciation A/C CR
(The above journal entry will go the Primary Ledger.
Depreciation journal entries will be created every month until the
Asset is fully depreciated.)
Run Depreciation for the FA Tax Book. The Asset will be
depreciated per Local GAAP Depreciation schedules.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 5

o
o

Depreciation Expense A/C DR.


Accumulated Depreciation A/C CR

(The above journal entry will be created in the Secondary


Ledger. Depreciation journal entries will be created every month
until the asset is fully depreciated. The Tax book is pointed to
the Secondary Ledger.)
The above journal entries in Blue text will post to the Primary Ledger.
The journal entries in Green Italicize text will post to the Secondary
Ledger

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 6

Accounting Manager Setups for


Secondary Ledger
The Secondary Ledger provides additional accounting representation of
the information present in the Primary Ledger. For Secondary ledger,
select Subledger Accounting Options then click on the update icon
(Pencil).

Beneath Application, select Assets then click on the Pencil icon in the
Update Accounting Options column.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 7

Every time a journal is posted in the Primary ledger, it gets created in the
Secondary Ledger.
Set Use Primary Ledger Amounts to No to switch off the flow of all
journal entry transactions for assets generated in the Fixed Asset
Subledger, from the Primary ledger into the Secondary ledger.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 8

Fixed Asset Books Setup


Corporate Book
The Corporate FA book for China will be based upon US GAAP and will
be pointed to the Primary Ledger (CHN HUTS PRC PRIMARY).
Assets costed below 2,500 USD will be expensed. The life of the Assets
costed below 2,500 USD will be set to 1 month.
Assets costed above 2,500 USD will be depreciated based upon US
GAAP depreciation schedule.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 9

Tax Book
The Tax FA book for China will be based upon China GAAP and will be
pointed to the Secondary Ledger (FA-TEST).
Assets costed above 250 USD will be depreciated based upon China
PRC GAAP depreciation Schedule.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 10

Asset Categories
*Note: Two different Asset Categories were created for the same type of
asset (i.e. Building).
First asset category TEST.TEST was created for assets costing < 2,500
USD. HUTS Corp Book and HUTS TAX2 Book were added to
TEST.TEST Asset Category.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 11

The difference between the HUTS Corp Book and HUTS Tax2 Book is
the account numbers used for Depreciation Expense and Accumulated
Depreciation.
For an asset costing < 2,500 USD, for the corporate book the:
- Common Expense account number was inserted in the Depreciation
Expense Account field
- Asset Cost account number was inserted in the Accumulated
Depreciation Expense Account field

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 12

For an asset costing < 2,500 USD, the normal Depreciation Expense
and Accumulated Depreciation accounts were still used for the Tax
Book.
The second Asset Category TEST2.TEST2 was created for assets costing
> or = 2,500 USD:
HUTS Corp Book and HUTS TAX2 Book were added to the
TEST2.TEST2 Asset Category.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 13

Because the asset cost is > or = 2,500 USD in both books, normal
Asset Cost and Accumulated Depreciation account numbers were
inserted for HUTS Corp and HUTS TAX2 for the TEST2.TEST2 asset
category.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 14

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 15

How to Cause 100% Depreciation in


the Same Month an Asset is Added to
Oracle Assets
As part of the Fixed Asset Solution for Dual GAAP Ledgers, an asset
costing < 2,500 USD and posting to the FA Corporate Book must be
100% depreciated in the same month the asset was added. The following
procedures describe the setup up steps needed to fully depreciate an asset
the same month it is added to the Fixed Asset system.
Background: An asset was manually created for less than 2,500 USD in
the FA Corporate Book. The appropriate Asset Category was also
selected to cause:
o

the Common Expense account to be used in place of


Depreciation Expense

the Asset Cost account to be used in place of Accumulated


Depreciation within the Corporate Book for HUTS

From the Navigator, select: Assets > Workbench


The Find Assets window will be displayed. [Enter] the asset number in
the Asset Number field, then [click] on the Find button.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 16

The Assets window will be displayed. [Click] on the Books button.

The Books window will be displayed. [Tab] to the yellow highlighted


Book field and use the LOV to select the appropriate book (in this
scenario it is the HUTS Corp book). Then, [press] the Tab key to view
the financial information.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 17

After the financial data appears, [tab] to the Salvage Value field:
change the amount to 0 USD.
After the change is made, the Recoverable Cost field should display the
same amount as the Current Cost field.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 18

In the Depreciation tab, [click] on the Life Years field. Use the LOV to
change the Years to 0 and the Months to 1 as highlighted in the Lifes
window below.

Make sure to save the changes when finished.


Return to the Navigator and select: Depreciation > Run Depreciation.
[Enter] the Book and Period for which to run Depreciation, then [click]
on the Run button.
Note: Only click on the Close Period check box if you want to close
the period.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 19

The Journal Entry Reserve Ledger Report is automatically generated


after depreciation is completed running. From the Menu Bar, select:
View > Requests to review the report. The report displays the current
month depreciation amount for Asset # 181056. For this scenario, the
total amount of the asset is fully depreciated in the Corporate Book
because the asset is less than 2,500 USD.

From the Navigator, select: Create Accounting Entries. This program


creates the Fixed Asset Journal Entries which can be transferred to
General Ledger.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 20

The Create Accounting Entries program will create the GL import for the
Journal Entries.
Review the Journal Import Execution Report, for Status of Success and
to ensure there are no errors.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 21

Change to the appropriate GL Responsibility to review the Fixed Asset


Journal Entries, in GL. Select: Journal > Enter. Use the Find Journals
window to locate the journal entry.

The Journals window will appear. Because the Asset #181056 amount
is < 2,500 USD in the Primary Ledger, the following journal entry was
created:
- Debit: The Common Expense account (instead of Depreciation
Expense) 2,100.00 USD
- Credit: The Asset Cost account (instead of Accumulated Depreciation)
2,100.00 USD

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 22

The Financial Inquiry window in Fixed Assets displays the asset for
both books.
In HUTS Corporate (Corporate Book), the asset, for < 2,500 USD has
been fully depreciated.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 23

In the HUTS TAX2 (Tax Book), the asset, for < 2,500 USD has
remaining life.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 24

Subledger Accounting Fixed Assets Solution

During Month End


close, FA
Accountant
processes any
remaining assets
in Mass Additions
(M)

Is Asset < 2,500


USD (M)

Yes

FA Accountant
processes new assets,
selecting a special
Asset Category &
Location for Assets <
2,500 USD (M)

FA Accountant will
post Mass
Additions to Fixed
Assets (A)

FA Corporate Book
(Linked to Primary Ledger)

No

Asset added to
Mass Additions
table in Fixed
Assets (A)

FA Accountant processes
new assets, selecting
usual Asset Category &
Location for Assets > or =
to 2,500 USD (M)

FA Accountant will
run Periodic Mass
Copy to transfer
assets from the FA
Corporate Book to
the FA Tax Book (A)

In the FA Corporate
Book, FA Accountant
verifies the life of the
asset (<2500 USD) is
1 month (M)

For the FA Corporate


Book, FA Accountant
will run Depreciation
(A)

For the FA Corporate


Book, FA Accountant
will run Accounting
Entries and send
journal entries to
Primary Ledger (A)

Page 2
Primary
Ledger

Page 2 FA
Tax Book

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 25

Secondary
Ledger

FA Tax Book
(Linked to Secondary Ledger)

Primary Ledger

Subledger Accounting Fixed Assets Solution

Page 1

Page 1

For the FA Corporate


Book, FA Accountant
will run Accounting
Entries and journal
entries will be received
in the Primary Ledger
(A)

FA Accountant will
update the depreciation
life in FA Tax Book for
the new assets based
upon Local GAAP
Depreciation Schedule, if
necessary (M)

For the FA Tax Book,


FA Accountant will run
Depreciation (A)

FA Accountant will Create


Journal Entries and send
journal entries to
Secondary Ledger (A)

For the FA Tax Book, FA


Accountant will run
Accounting Entries and
journal entries will be
received in the Secondary
Ledger (A)

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 26

Conclusion
This document provided an overview of the Fixed Asset solution for
Dual GAAP Ledgers. It highlighted the accounting journal entry flow,
covered the necessary setups for Accounting Setup Manager and Fixed
Assets (Asset Books and Asset Categories) and provided detail steps on
how to fully depreciate an asset the same month it was added.

Fixed Asset Solution for Dual GAAP Ledgers Using Oracle Release 12 Standard Functionality
Page 27

Fixed Asset Solution for Dual GAAP Ledgers Using


Oracle Release 12 Standard Functionality
September, 2014
AST Corporation
1755 Park Street, Suite 100
Naperville, Illinois 60563
Phone: 888-278-0002
Fax:
630-778-1179
www.astcorporation.com
Copyright 2014 AST Corporation
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founded in 1995 to serve commercial and public
sector organizations in utilizing the full potential of
their investment in Oracle Applications and
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Our mission is to insure that you, as a valued
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