ORACLE APPLICATIONS

WHITE PAPER

Retirements in Oracle Assets

A P P L I C A T I OIntroduction NS
White_retirement.doc Oracle/Client Confidential - For internal use only

Contributors

Name Le Zhong

Position Technical Support Analyst, Fixed Assets Support Team

Change Record

Date

Author

Versi on 1.0 Initial Release

Change Reference

05-15-2000

Le Zhong

The Change Record section of the document should identify the date of the initial release of the document as well as any additional versions. When possible the change record should indicate the primary focus for changes within each new version. The change reference should be used to indicate what section was changed as well as the content.

Retirements in Oracle Assets White_retirement.doc

Introduction Oracle/Client Confidential - For internal use only

Contents

INTRODUCTION ........................................................................................................................................................................ 5 Objective............................................................................................................................................................................. 5 Scope .................................................................................................................................................................................. 5 Issues Covered .................................................................................................................................................................... 5 INDIVIDUAL RETIREMENT VERSUS MASS RETIREMENT............................................................................................................... 6 FULL VERSUS PARTIAL RETIREMENT......................................................................................................................................... 8 RETIREMENT/REINSTATEMENT ERROR CORRECTION ................................................................................................................. 9 Complete Retirement......................................................................................................................................................... 10 JOURNAL ENTRIES FOR RETIREMENT ....................................................................................................................................... 11 REPORTING ISSUES ................................................................................................................................................................. 13 BEHIND THE SCENES .............................................................................................................................................................. 14 POTENTIAL CORRUPTION........................................................................................................................................................ 16 TROUBLESHOOTING CHECK LIST ............................................................................................................................................. 17 Other Issues ...................................................................................................................................................................... 17

Retirements in Oracle Assets White_retirement.doc

Introduction Oracle/Client Confidential - For internal use only

Introduction

Objective

THE PURPOSE OF THIS DOCUMENT IS TO PROVIDE A QUICK LEARNING GUIDE of the retirement process in Oracle Assets as well as a problemtroubleshooting checklist. The retirement transaction is one of the most frequently used transaction types in Oracle Assets. Our support experience shows us that an improper retirement operation could cause potential massive data corruption. We will document how to avoid this situation. There are numerous retirement reports. We will attempt to document all of the important reports to give you the whole picture from initiating the transaction to running the retirement process to reporting.

Scope
THIS PAPER explains how to do an individual retirement versus a mass retirement. How to manipulate the transaction including undo versus reinstate. When data corruption occurs, how to handle it, etc.

Issues Covered
There are many reasons to retire an asset, such as if that asset is stolen, damaged, out of date or sold, etc. The Asset retirement transaction is reversible. It takes two steps to finish a retirement process. Here are those steps and their reversal actions: Action Initiate Retirement by Individual or Mass Retirement Complete Retirement by Running Gain/Loss or Depreciation Program Reversal Action Undo Reinstate

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Introduction Oracle/Client Confidential - For internal use only

Individual Retirement Versus Mass Retirement

Use the Retirements form (Figure 1) to retire a single asset. Navigation path: Assets/Asset workbench/Retirement.

Figure 1

Notice the Reinstate button, if you retire an asset without running Gain/Loss program, this button will be labeled Undo Retirement. Error correction is possible. We will talk about this later. Use the Mass Retirements form (Figure 2) to retire a group of assets. Navigation

path for mass retirement: Mass Transactions/Retirements

When you define a mass retirement, you can choose to immediately submit the concurrent request to retire the selected assets, or you can save the mass retirement definition for future submission. You can change the details of any mass retirement before you submit the concurrent request.

Retirements in Oracle Assets White_retirement.doc

Individual Retirement Versus Mass Retirement Oracle/Client Confidential - For internal use only

When you submit a mass retirement, Oracle Assets automatically runs the Mass Retirements Report and the Mass Retirements Exception Report. Please review those two reports before running Gain/Loss program to identify any human errors in mass retirement criteria.

Figure 2

Retirements in Oracle Assets White_retirement.doc

Individual Retirement Versus Mass Retirement Oracle/Client Confidential - For internal use only

Full Versus Partial Retirement

You can do full or a partial retirement. When you retire an asset by units, Oracle Assets automatically calculates the fraction of the cost retired. When you retire an asset by cost, the units remain unchanged and the cost retired is spread evenly over all assignment (distribution) lines.

Retirements in Oracle Assets White_retirement.doc

Full Versus Partial Retirement Oracle/Client Confidential - For internal use only

Retirement/Reinstatement Error Correction

A new retirement receives the status PENDING. After running depreciation or calculate gains and losses, the status changes to PROCESSED. When you reinstate a PENDING retirement, the application deletes the retirement transaction and the asset is immediately reinstated. It does not leave any trace of retirement at all. Oracle Assets only keeps the retirement record permanently after running Gain/Loss program. If you reinstate a PROCESSED retirement, the application changes the status to REINSTATED, and you must rerun the Calculate Gains and losses program or run depreciation process the reinstatement. So when you perform an individual retirement or a mass retirement, the application creates a PENDING retirement transaction and they are completely reversible without leaving any trace. Note: If you submit a mass reinstatement before running the Calculate Gains and Losses, the application immediately reinstates these assets. If you submit a mass reinstatement to reinstate PROCESSED retirements, you must rerun the Calculate Gains and Losses or run depreciation to process the reinstatement. Now, lets see how to correct errors for individual retirement. Retirement: 1. Go to Assets->Assets Workbench, query up the asset with the wrong retirement and click Retirements button. 2. Find the Retirement Transaction that you want to undo by specifying its retirement number. If you do not know the retirement number, look for it in the Transaction History window of the Inquiry window. 3. Click Reinstate if the retirement has the status of PROCESSED or click Undo Retirement if the retirement has the status of PENDING. Reinstatement: 1. Go to Asset/Asset Workbench, query up the asset with the wrong reinstatement and click the Retirement button. 2. Find the Reinstatement transaction that you want to undo and click Undo Reinstatement. How to correct errors for mass retirement: In the Mass Retirements window, use the mass transaction number to find and select the transaction you want to reinstate and click Reinstate. Oracle Assets reverses the mass retirement as follows: 1. If the Calculate Gain and Losses program has been run, Oracle Assets resets the status of the appropriate assets from PROCESSED to REINSTATE. Run the program again to process the mass reinstatement. The assets are then reinstated when depreciation is run. 2. If the Calculate Gains and Losses program has not been run, Oracle Assets simply deletes the appropriate PENDING retirement transactions. The associated assets are reinstated immediately without leaving any trace.

Retirements in Oracle Assets White_retirement.doc

Retirement/Reinstatement Error Correction Oracle/Client Confidential - For internal use only

Complete Retirement
Retirements and PROCESSED reinstatements are not complete until you run calculate gains and losses. Here is how the oracle assets figures it out: Gain/Loss = [Proceeds of Sale] - [Cost of Removal] - [Net Book Value Retired] + [Revaluation Reserve Retired Retirement/Reinstatement and Depreciation Depreciation and Retirements/Reinstatements. 1) The retirement convention, date retired, and depreciation method determine how much depreciation Oracle Assets takes when you retire an asset. Oracle Assets reserves the year-to-date depreciation if the assets depreciation method does not depreciate it in the year of retirement. In this case, when you perform a full retirement, Oracle Assets reserves the year-to-date depreciation of the asset, and computes the gain or loss using the resulting net book value. For partial retirements, Oracle Assets reverses the appropriate fraction of the year-to-date depreciation and computes the gain or loss using the appropriate fraction of the resulting net book value. If the depreciation method takes depreciation in the year of retirement, Oracle Assets uses the retirement convention to determine whether the asset is eligible for additional depreciation in that year or whether some of that years depreciation must be reversed. When you perform a partial retirement, Oracle Assets Depreciates the portion of the asset you did not retire based on the method you use. If your depreciation method multiplies a flat rate by the cost, Oracle assets depreciates the assets cost remaining after a partial retirement.

2) The retirement convention, date retired, and period in which you reinstate

an asset controls how much depreciation Oracle Assets calculates when you reinstate an asset. When you reinstate a retired asset, Oracle Assets usually calculates some additional depreciation expense in the period in which you perform the reinstatement, unless you perform it in the same period that you retired the asset. This additional depreciation is the depreciation that would have been taken if you had not retired the asset. Sometimes, however, a reinstatement results in a reversal of depreciation. This occurs if the retirement convention caused some additional depreciation when you retired the asset, and then you reinstate the asset before the retirement prorate date. Then Oracle Assets reverses the extra depreciation that it took at retirement until the appropriate accounting periods take it.

Retirements in Oracle Assets White_retirement.doc

Retirement/Reinstatement Error Correction Oracle/Client Confidential - For internal use only

Journal Entries for Retirement

Current Period Retirements Example: You place an asset in service in Year 1, Quarter 1. The asset cost is $4,000. The life is 4 years, and you are using straight-line depreciation. In Year 3, Quarter 3, you sell the asset for $2,000. The cost to remove the asset is $500. The asset uses a retirement convention and depreciation method, which takes depreciation in the period of retirement. You retire revaluation reserve in this book. Dr. Accumulated Depreciation 2,500.00 Dr. Proceeds of Sale Clearing 2,000.00 Dr. Cost of Removal Gain 500.00 Dr. Revaluation Reserve 600.00 Dr. Net Book Value Retired Gain 1,500.00 Cr. Asset Cost 4,000.00 Cr. Proceeds of Sale Gain 2,000.00 Cr. Cost of Removal Clearing 500.00 Cr. Revaluation Reserve Retired Gain 600.00 If you enter the same account for each gain and loss account, Oracle Assets creates a single journal entry for the net gain or loss. Dr. Accumulated Depreciation 2,500.00 Dr. Proceeds of Sale Clearing 2,000.00 Dr. Revaluation Reserve 600.00 Cr. Asset Cost 4,000.00 Cr. Cost of Removal Clearing 500.00 Cr. Gain/Loss 600.00 Prior Period Retirement Example: You place an asset in service in Year 1, Quarter 1. The asset cost is $4,000, the life is 4 years, and you are using straight-line depreciation. In Year 3, Quarter 3, you discover that the asset was sold in Year 3, Quarter 1 for $2000. The removal cost was $500. The asset uses a retirement convention and depreciation method, which allow you to take depreciation in the period of retirement. Dr. Accumulated Depreciation 2,500.00 Dr. Proceeds of Sale Clearing 2,000.00 Dr. Cost of Removal Loss 500.00 Dr. Net Book Value Retired Loss 1,750.00 Cr. Proceeds of Sale Loss 2,000.00 Cr. Cost of Removal Clearing 500.00 Cr. Asset Cost 4,000.00 Cr. Depreciation Expense 250.00 Current Period Reinstatement.

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Example: You discover that you retired the wrong asset. Oracle Assets creates journal entries for the reinstatement to debit asset cost, credit accumulated depreciation, and reverse the gain or loss you recognized for the retirement. Oracle Assets reverses the journal entries for proceeds of sale, cost of removal, net book value retired, and revaluation reserve retired. Oracle Assets also reverses the journal entries you made to clear the proceeds of sale and cost of removal. Oracle Assets also creates journal entries to recover the depreciation not charged to the asset and for the current period depreciation expense. Dr. Asset cost 4,000.00 Dr. Cost of Removal Clearing 500.00 Dr. Gain/Loss 600.00 Dr. Depreciation Expense 250.00 Cr. Cr. Cr. Accumulated Depreciation Proceeds of Sale Clearing Revaluation Reserve 2,750.00 2,000.00 600.00

Prior Period Reinstatement Example: You place an asset in service in Year 1, Quarter 1. The asset cost is $4,000.00, the life is 4 years, and you are using straight-line depreciation. In Year2, Quarter 1, you retire the asset, In Year 2, Quarter 4, You realize that you retired the wrong asset so you reinstate it. Dr. Asset cost 4,000.00 Dr. Cost of Removal Clearing 500.00 Dr. Proceeds of Sale Clearing 2,000.00 Dr. Depreciation Expense 250.00 Dr. Depreciation Expense 500.00 (adjustment) Cr. Net book Value Retired Loss 2,750.00 Cr. Cost of Removal Loss 500.00 Cr. Proceeds of Sale Clearing 2,000.00 Cr. Accumulated Depreciation 2,000.00 Assets Fully reserved upon Addition If you add an asset with an accumulated depreciation equal to the recoverable cost, it is fully reserved upon addition. When you retire it, Oracle Assets does not back out any depreciation, even if you assigned the asset a depreciation method that backs out all depreciation in the year of retirement. However, it creates all the other journal entries associated with retiring a capitalized asset.

Non-Depreciated Capitalized/Construction-in-Process (CIP) Assets A non-depreciated capitalized asset or a CIP asset has no accumulated depreciation. Therefore, Oracle Assets does not create journal entries to catch up depreciation. However, Oracle Assets creates all other journal entries associated with retiring a capitalized asset.

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Reporting Issues
Report Name Form 4684: Casualties and Thefts Report Retired Assets Without Property Class Report Retired Assets Without Retirement Types Report Purpose Shows the asset retirements with the retirement type that you request Shows the retired assets without a 1245 or 1250 property class Shows the asset retirements for each cost center for the book and period that you select; an asterisk (*) is displayed next to reinstated assets Shows the assets you retired for the Book and accounting period range you select Shows the assets that you removed from the cost centers through retirements and transfers and the location of each unit Shows retirements you that reinstated for the Book and From/To Period range Shows Gain or loss and any ITC recapture for asset retirements Reviews the mass retirement effect before you process it Identifies exception assets that were not retired as part of the mass retirement transaction

Asset Retirements Reports

Asset Disposals Responsibility Report Reinstated Assets Report Tax Retirement Report Mass Retirements Report Mass Retirements Exception Report

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Behind the Scenes

In this section, we will go behind the scenes to see what is happening for this transaction type. You will see what data is updated in what tables for a retirement in Oracle Assets. This will give you more knowledge so that you can identify the problem by yourself. When you fully retire an asset, the following tables are updated: <fa_transaction_headers> A row marked FULL RETIREMENT is created. <fa_books> The current row is terminated and a new row is created with cost and reserve equal to 0. <fa_distribution_history> Oracle Assets populates the transaction_units and the retirement_id columns of the active rows. <fa_asset_history> Oracle Assets populates the date_ineffective for the active row. <fa_retirements> A row in inserted with the details of the retirement. When you partially retire an asset, the following tables are updated: <fa_transaction_headers> Two rows, one marked PARTIAL RETIREMENT and the other marked TRANSFER OUT. <fa_additions> The row is updated to reflect the new number of units. <fa_asset_history> The current row is terminated and a new row is created with the new number of units. <fa_distribution_history> The affected rows are terminated and new ones are created, if necessary. <fa_books> The current row is terminated and a new row is created with the reduce cost and accumulated depreciation. <fa_retirements> Inserts a PENDING row with the retirement details. When you reinstate as asset, the following tables are updated: <fa_transaction_headers> A row marked REINSTATEMENT is created. <fa_retirements> Status of the fa_retirements row is set to REINSTATE. The Calculate Gains and Losses program updates the following tables for retirement: <fa_adjustments> Rows inserted with source_type_code = RETIREMENT remove cost and reserve from ALL distributions and redistribute as necessary.

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<fa_retirements> The retirement row is updated with the net_book_value _retired and gain_loss_amount. The status is PROCESSED.

proper set to

<fa_additions> If the reinstatement is for a partial unit retirement, the current_units column must be restored. <fa_asset_history> If the reinstatement is for a partial unit retirement, the current row is terminated and a new row is created. <fa_distribution_history> All of the (semi-)current rows are fully terminated and new rows are created. <fa_books> The current row is terminated and a new row is created. <fa_adjustments> Rows are inserted which exactly balance the rows inserted for the retirement row by row. Source_type_code is still set to RETIREMENT. <fa_retirements> The retirement row is terminated. Its status is set to DELETED.

An interesting SQL script(we call it asset trace script):

How do you get a whole picture (current and historic data) of assets in your system? An asset trace script file is available on our ftp site: ftp://205.227.44.220/apps/patchsets/FA/FA_ASSET_TRACES/E-trace.sql This script file produces an html file that shows you everything you want to know about an asset. It takes two parameters, book type code (book name) and asset id. Use the following script to obtain the asset_id if you do not know what it is: select asset_id from fa_additions where asset_number=&asset_number; Compare each retirement transaction in asset trace file against what is documented in Behind the Scenes section. You will be able to determine what went wrong with the retirement transaction. Remember, always call Oracle Support Services for data fix issues.

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Potential Corruption
There are two known scenarios that could cause data corruption for a retirement. The first one is caused by running the Gain/Loss program and the Depreciation program at the same time. The user will find that the same retirement is done twice against the same asset. The way to avoid such a situation from happening is NEVER run those two processes at the same time. The second one is caused by terminating the Retirement program from the concurrent manager. For example, a user did a mass retirement with bad criteria which accidentally retires every asset in the book. After clicking the Retire button, the user notices the error and panics, rushes to the concurrent manager and terminates the job from there. This could cause some retirements irreversible damage due to data corruption. The way to avoid such a situation is to NEVER terminate a running retirement program. As you can see from the Error Correction section, there is no reason to panic. The process at this stage is completely reversible without leaving any trace. What do you do when above situations happened? For the first one, contact your DBA so he can restore from a backup as soon as possible. If it is not feasible, call Oracle Support and request a script to clean up those duplicated retirements. To prevent this from happening again you need to make the Retirements program incompatible with the Depreciation program so that they will not run in parallel. To do this, sign on as System Administrator and navigate to Concurrent, Program. Select Query, Enter and enter FARET in the short name field on the form. Select Query, Run. When the data is returned, hit the Incompatibilities button and enter FADEPR on this form. For the second one, follow the instructions here: 1. If you did not terminate the process, you can reinstate the retirements following steps documented in the Error Correction section and keep going with your other operations. If you did not terminate the process and run depreciation instead of directly running Gain/Loss and you find yourself in a new fiscal year, contact your DBA so that he can restore your database from backup as soon as possible. If it is not feasible, call Oracle Support for help AS SOON AS POSSIBLE. If you did terminate the process from the concurrent manager and found data corrupted, contact your DBA so that he can restore your database from backup as soon as possible. If it is not feasible, call Oracle Support for help.

2.

3.

Note: A complete database recovery from backup is the quickest way to recover from these situations. Oracle support can only help you fix corrupted data manually. This could be a long process depending on the amount of data corrupted.

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Troubleshooting Check list

Retirement related:
Oracle Assets does not retire the following types of assets, even if they are selected as part of a mass retirement transaction: 1. Assets added in the current period 2. Assets with transactions dated after the retirement date you entered. 3. Assets that are multi-distributed and one or more distributions do not meet the mass retirement selection criteria. 4. You cannot retire assets by units in tax book; you can only perform partial and full cost retirements in tax book. 5. For CIP assets, you can only perform full retirements; you cannot retire them by units or retire them partially by cost. 6. If you perform multiple partial retirements on an asset within a period, you must run the calculate gains and losses program between transactions. 7. If you partially retire a unit of production asset, you must manually adjust the capacity to reflect the portion retired. 8. Retiring assets in one book does not affect their status in another. If you wish to retire the same assets in all books, retire them from each book separately, use Mass Copy (Note that if you do not allow the mass copy of retirements in book controls, no retirements in book controls, no retirements get copied) 9. You cannot retire an asset if you added it in the current period. If you just have to do it, you must enter your retirement as a prior period retirement after you run depreciation. If you want my opinion, just delete it. 10. You cannot perform prior period retirements to assets having unplanned depreciation amounts. 11. You can retire retroactively only in the current fiscal year, and only after the most recent transaction date.

Reinstatement related:
1. 2. You cannot reinstate assets retired during a prior fiscal year. Reinstate assets in one book does not affect their status in another. If you wish to reinstate same assets in all books, reinstate them from each book separately.

Other Issues
There are a few frequently reported issues regarding Gains/Losses process or Depreciation process. If the failed asset has a retirement or reinstatement transaction in the current period. It does not necessary mean that something is wrong with the retirement or reinstatement transaction. For instance, if you see a message start with APP-1930, then you know it has nothing to do with retirement or reinstatement. This is a Flexbuilder issue. If you are unable to figure out the problem base on what we have documented here, log an iTAR with Oracle Support for additional help.

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Retirements in Oracle Assets White_retirement.doc

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