Accounting in Assets

Creating journal entries is a two-step process:

1. At the end of each accounting period, run the depreciation program for each
of your books. Running the depreciation program closes the current period and
opens the next period.
2. Run the Create Journal Entries program to create journal entries to your
general ledger. Run it once for each period in each book for which you allow
posting to the general ledger. You can create journal entries for any period for
which you have run depreciation for which you have not already created journal
entries.

Oracle Assets creates journal entries for the following general ledger
accounts:
1. Accumulated Depreciation
2. Asset Clearing
3. Asset Cost
4. CIP Clearing
5. CIP Cost
6. Cost of Removal Gain, Loss, and Clearing
7. Deferred Accumulated Depreciation
8. Deferred Depreciation Expense
9. Depreciation Adjustment
10. Depreciation Expense
11. Intercompany Payables
12. Intercompany Receivables
13. Net Book Value Retired Gain and Loss
14. Proceeds of Sale Gain, Loss, and Clearing
15. Revaluation Amortization
16. Revaluation Reserve
17. Revaluation Reserve Retired Gain and Loss

Depreciati When you run depreciation, Oracle Dr. Depreciation Expense 200.00
on Assets creates journal entries for Cr. Accumulated Depreciation
your accumulated depreciation 200.00
accounts and your depreciation
expense accounts.
Oracle Assets creates the following
journal entries for a current period
depreciation charge of $200:
Asset You purchase and place the asset Dr. Asset Clearing 4,000.00
Addition in into service in Year 1, Quarter 1. Cr. AP Liability
Payable 4,000.00
System
Oracle Assets – Dr. Asset Cost 4,000.00
CURRENT Dr. Depreciation Expense 250.00
PERIOD Cr. Asset Clearing
ADDITION 4,000.00
Cr. Accumulated Depreciation
250.00

You place an asset in service in

Year 1, Quarter 1, but you do not
enter
it into Oracle Assets until Year 2,
Quarter 2. Your payables system
creates the same journal entries
to asset clearing and accounts
payable
liability as for a current period
addition.
Oracle Assets – PRIOR PERIOD Dr. Asset Cost
ADDITION 4,000.00
Dr. Depreciation Expense
250.00
Dr. Dep Expense
1250.00 (adjustment)
Cr. Asset Clearing
4,000.00
Cr. Accumulated Dep
1500.00

Oracle Assets creates journal Dr. Asset Cost 4000

entries for the asset cost account (mass addition #2
for the asset cost account)
mass addition into which the Cr. Asset Clearing
others were merged. Oracle 3000
Assets (mass addition #1 accounts
creates journal entries for each payables clearing account)
asset clearing account. For Cr. Asset Clearing
example, 1000
you merge mass addition #1 into (mass addition #2 accounts
mass addition #2, so Oracle payables clearing account)
Assets
creates the following journal
entries:
Construction– Oracle Assets Dr. CIP Cost 4,000.00
In–Process (CIP) Cr. CIP Clearing 4,000.00
Addition

Capitalization A capitalization transaction is

similar to an addition transaction:
you
place the asset in service so you
can begin depreciating it. When
you
capitalize an asset in the period
you added it, Oracle Assets
 creates the
following journal entries:
Payables System Dr. CIP Clearing 4,000.00
Cr. AP Liability
4,000.00
Oracle Assets – CAPITALIZED IN Dr. Asset Cost 4,000.00
PERIOD ADDED Dr. Depreciation Expense 250.00
Cr. CIP Clearing 4,000.00
Cr. Accumulated Depreciation
250.00
When you capitalize an asset in a Dr. Asset Cost 4,000.00
period after the period you added Dr. Depreciation Expense 250.00
it, Cr. CIP Cost 4,000.00
Oracle Assets creates journal Cr. Accumulated Depreciation
entries that transfer the cost 250.00
from the CIP
cost account to the asset cost
account. The clearing account
has already been cleared.
Oracle Assets – CAPITALIZED
AFTER PERIOD ADDED
Asset Type If you change the asset type from Dr. CIP Cost 4,000.00
Adjustments capitalized to CIP, Oracle Assets Cr. Asset Clearing 4,000.00
creates journal entries to debit
the CIP cost account and credit
the asset
clearing account. Oracle Assets
does not create capitalization or
reverse capitalization journal
entries for CIP reverse
transactions.
Cost Adjustments to Assets
Using a Life–Based
Depreciation Method
You place an asset in service in
Year 1, Quarter 1. The
recoverable cost is $4,000. The
life of your asset is 4 years, and
you are using straight–line
depreciation. In Year 1, Quarter
4, you receive an additional
invoice for the asset and change
the recoverable cost to $4,800.
Payables System Dr. Asset Clearing 800.00
Cr. Accounts Payable Liability
800.00
Oracle Assets Dr. Asset Cost 800.00
Cr. Asset Clearing 800.00
Expensed Dr. Depreciation Expense 300.00
Dr. Depreciation Expense
150.00
(adjustment)
Cr. Accumulated Depreciation
450.00
Amortized Dr. Depreciation Expense 311.53
 Cr. Accumulated Depreciation
311.53
Cost Adjustments to Assets
Using a Flat–Rate
Depreciation Method
You place an asset in service in
Year 1, Quarter 1. The
recoverable cost is $4,000. You
are depreciating the asset cost at
a 20%
flat–rate. In Year 1, Quarter 4,
you change the recoverable cost
to
$4,800.
Payables System Dr. Asset Clearing 800.00
Cr. Accounts Payable Liability
800.00
Oracle Assets Dr. Asset Cost 800.00
Cr. Asset Clearing 800.00
Expensed Dr. Depreciation Expense 240.00
Dr. Depreciation Expense 120.00
(adjustment)
Cr. Accumulated Depreciation
360.00
Amortized Dr. Depreciation Expense 240.00
Cr. Accumulated Depreciation
240.00
Cost Adjustments to Assets
Using a Diminishing Value
Depreciation Method
You place an asset in service in
Year 1, Quarter 1. The
recoverable cost is $4,000. You
are using a 20% flat–rate that
you apply
to the beginning of year net book
value. In Year 2, Quarter 1, you
change the recoverable cost to
$4,800.
Payables System Dr. Asset Clearing 800.00
Cr. Accounts Payable Liability
800.00
Oracle Assets Dr. Asset Cost 800.00
Cr. Asset Clearing 800.00
Expensed Dr. Depreciation Expense 192.00
Dr. Depreciation Expense
160.00
(adjustment)
Cr. Accumulated Depreciation
352.00
Amortized Dr. Depreciation Expense 200.00
Cr. Accumulated Depreciation
200.00
Cost Adjustments to Assets
 Depreciating Under a Units of
Production Method
You purchase an oil well for
$10,000. You expect to extract
10,000 barrels of oil from this
well. Each quarter you extract
2,000
barrels of oil. In Year 1, Quarter
3, you realize that you entered
the
wrong asset cost. You adjust the
recoverable cost to $15,000.
Payables System Dr. Asset Clearing 5,000.00
Cr. AP Liability
5,000.00
Oracle Assets Dr. Asset Cost 5,000.00
Cr. Asset Clearing
5,000.00
Expensed Dr. Depreciation Expense
3,000.00
Dr. Depreciation Expense
2000.00
(adjustment)
Cr. Accumulated Dep 5,000.00
Amortized Dr. Depreciation Expense
3,666.67
Cr. Accum Depreciation 3,666.67
Depreciation You place an asset in service in
Method Year 1, Quarter 1. The
Adjustments recoverable cost is $4,000, the
life is 4 years, and you are using
the 200 declining balance
depreciation method. In Year 2,
Quarter 1, you change the
depreciation method to straight–
line.
Expensed Dr. Depreciation Expense 250.00
Dr. Accumulated Depreciation
750.00
Cr. Depreciation Expense
1000.00
(adjustment)
Amortized Dr. Depreciation Expense 166.67
Cr. Accumulated Depreciation
166.67
Journal Entries for
Retirements and
Reinstatements
Current You place an asset in service in
Period Year 1, Quarter 1. The asset cost
Retirements 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 take
depreciation in the period of
retirement. You retire revaluation
reserve in this book.
Receivables System
Payables System
Oracle Assets – MULTIPLE
GAIN/LOSS ACCOUNTS
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.
Oracle Assets – SINGLE
GAIN/LOSS ACCOUNT
Dr. Accounts Receivable
2,000.00
Cr. Proceeds of Sale Clearing
2,000.00
Dr. Cost of Removal Clearing
500.00
Cr. Accounts Payable 500.00
Dr. Accumulated Dep 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
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