Depreciation Methods

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Transaction Description

After a depreciation method has been used for the first time, it cannot be updated. If you need different rates, use the Depreciation Methods window to define additional methods.

Method types may be calculated, table-based, units of production, and flat rate. The procedure is slightly different for each method type.

• Calculated: The calculation basis defaults to cost and net book value (NBV) is not valid.
• Table-based: Since the depreciation engine will be using rates from the table, both cost and NBV can be used as a basis. Choose the Rates button to enter rates into the rate table based on the years and months. The rates in the rate table must fully depreciate an asset over its life. If the calculation basis is cost, then the sum of the rates in the rate table must equal 1.0000. If the calculation basis is NBV, then the rate for the last year in the rate table must be 1.0000 and all of the other rates must be between zero and 1.0000. The annual rates for each prorate period must reflect the fraction of the year the asset is in service. The rate must be prorated based on the number of periods in the year and on the prorate convention.
• Units of Production: The calculation basis defaults to cost and NBV is not valid.
• Flat Rate: Since you are giving the rates in the rate table, both cost and NBV can be used as a basis.

Entering a rate table for long lived assets can be tedious and error prone. For example, a 20 year asset where there are 12 periods per year, can have a rate table of 240 rows. Consider calculating the rates in MS-Excel and then using a data loader program to load the form shown in the Depreciation Rates window. A data loader program can read the cells of a spreadsheet in one of your windows and enter the values and navigation keystrokes into another window on your desktop. Both free and professional versions of a data loader are available at http://www.dataload.net.

Depreciation Methods

List of Fields

• Method
• Description
• Method Type
• Calculation Basis
• Depreciable Basis Rule
  • Depreciate in Year Retired
  • Exclude Salvage Value
  • Straight Line Method
  • Polish Adjustment Calculation Basis
• Life Years/Months
• Prorate Periods per Year
• Descriptive Flexfield

Depreciation Rates

List of Fields

• Year
• Period
• Annual Rate

Depreciation Formula - Define Formula Tab

List of Fields

• Variables
• Functions
• Formulas

Use the Depreciation Formula window to define the calculation when the depreciation method type is Formula. This window has two tabs for defining and testing the formula. The define formula tab has several buttons arranged to look like a calculator (they aren't really a calculator). You can't just type a formula into the display window, you have to push the buttons to select the variables, functions, formulas and numeric constants that make up the formula. It's tedious, but it can be done.

The functions are from SQL (a language used by Oracle programmers and DBAs). For example the Decode function in the screen shot at the right is like an if-then-else command to evaluate the Remaining Life variable. This is how your would put in a rate switch at a particular time in the asset's life.

If you don't know SQL, you will have to get a programmer to help you.

Oracle Assets does not validate custom depreciation formulas. You are responsible for testing and the results of any formulas that you create.

Depreciation Formula - Test Formula Tab

List of Fields

• Resulting Depreciation Rate
• Life in Years
• Salvage Value
• Production Capacity
• Remaining Life 1 in Years
• Remaining Life 2 in Years
• Short Year

Error

Comments

Links

• Related: OracleAssets, AssetSetUp

This Topic Is Referenced By These Topics:
Related Links: FA12SetupAssetSystemAssetCategories, FA12SetupDepreciationSuperGroups

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Collaborating Authors and Reviewers: -- DianeMcHugh, JimCrum